Moratorium extension is another kick in the teeth for landlords
22nd June 2021
I wrote earlier in the year about the extension of the moratorium to the end of June as a huge house of cards that was ready to tumble, and at the time I predicted that it would be further extended; I have now been proven correct, however I did not expect that it would be extend until the end of March 2022, a further nine months away.
This is a huge kick in the teeth for commercial landlords, who, in the most part, have been made out in the media to be the big bad wolves preying on tenants who have been unable to trade. From my experience, as the head of commercial management of an East Midlands-based practice, this is quite simply not the case.
Don’t get me wrong, I fully understand the reasons the moratorium was put in place – to protect jobs – but it has now gone on too long. Essentially, the Government is preventing landlords from taking any action against any tenants for non-payment of rent until March 2022. They have been promoting open dialogue between landlord and tenant to find amicable solutions, however in reality any agreement reached has no teeth because the remedy for non-performance has been taken away.
My major issue is that there are still opportunistic tenants out there who can pay but won’t pay, and who have taken advantage of all the Government grants available, yet have built up substantial arrears. Now that the moratorium has been extended, these arrears are going to get bigger and this potentially will have a catastrophic impact on the landlord. There is also no means test; there is the assumption that the businesses are well run and strong enough to survive.
I have a few tenants who were struggling as a business even before the pandemic hit and now they have been given essentially a two-year free pass to continue to trade without any consequence for non-payment of rent. Do you want to guess what will happen on the 1st April 2022? I suspect they will wind the company up, having amassed the best part of two years of rent arrears, taken every pound of Government grant monies and loans available and leave the property in a dilapidated state. I suspect a week later they will be a phoenix from the ashes and set up a new company, probably using grant monies they have received to set up elsewhere.
What protection does a landlord have from this? None.
What assistance have landlords received since the pandemic hit? None.
What other industry or trade has been ordered to support customers the same way? None.
So why should landlords put up with it?
I have read articles and comments where it is reported that landlords have forced tenants to take loans to pay rent. I suspect the word “forced” is rhetoric by the British media to continue to paint the landlord as the evil land baron counting his money, while everyone else suffers, but what exactly is wrong with getting a loan? The landlord is not an interest-free bank and is a business in itself. It is not their responsibility to support their tenants’ business. Yes it is in their gift to provide rent incentives and other assistance, but each situation needs to be dealt with separately and on their own individual merits and circumstances.
I know that if an agreement can’t be reached, then arbitration is a potential course of action, but, forgive me for being a cynic, the law has historically favoured tenants and based on the support landlords have received from the Government over the last 18 months, I don’t expect this to change.
I genuinely hope I am wrong, but I suspect the next nine months for landlords, especially ones where receiving commercial rent is paramount for survival, is going to be tough, resulting in fire sales or worse.