Moratorium extension – a house of cards waiting to come tumbling down

11th March 2021

It comes as no great surprise that the Government has performed a U-turn on the moratorium on commercial property evictions.

In December it was extended to the end of March 2021, and this was promised to be the last extension. However, as a result of the Country entering a national lockdown at the beginning of January, it has now been extended to the end of June 2021.

The moratorium was only supposed to be a temporary measure to provide tenants with some much-needed breathing space at the start of the pandemic. My fear is that it is not actually helping anyone and is causing a far deeper and more serious problem.

As a managing agent, I have been on the frontline since March 2020, speaking with landlords and tenants daily, entering into sensible dialogue, promoting open lines of communications as we try to work together to find sensible solutions. These conversations got harder and harder as the pandemic continued and the arrears increased, and the landlord and tenant relationships started to suffer.

The common theme from all my discussions is that no-one wants to see good businesses fail or businesses evicted and properties vacant. Landlords have invested significant amounts of money into their properties and want to see them tenanted, but all the moratorium has done has been to remove a negotiating tool from landlords and kicked a potentially huge problem down the road. Yes, it has provided further protection and breathing space for the genuine tenants who are struggling, but it has also provided the “can pay, won’t pay” tenants with more leverage in their negotiations with landlords.

The moratorium has created a huge house of cards which could come tumbling down when it finally ends – and everyone will lose out. Tenants will have rent arrears they cannot meet, and landlords won’t recover back rent and will then be faced with vacant property holding costs, as well as potential unrecoverable dilapidations claims. If bank funding is involved, then landlords/investors could start to default on loan agreements.

Let it be in no doubt, the extension of the moratorium is another blow for commercial landlords, especially considering the re-start grants and recovery loan schemes being offered to tenants. How much of this money will find its way to the landlords who have received no assistance over the last 12 months?

To find out more, feel free to contact us, give us a call on 0115 958 8599 or email [email protected].