Next Wednesday is the last day shift, when retail and hospitality chains have to pay three months’ rent. However, many businesses have serious cash flow problems after being forced to close during the foreclosure.
Only about half of the rent due the previous quarter in March has been paid. Homeowners expect even less to get into their bank accounts this month, a deficit that is also straining the finances of real estate companies.
Robert Jenrick, the secretary of the communities, said the government was expanding measures to prevent companies in need of eviction over the summer. The new code, he hoped, “would help unlock conversations about rent and future payments while ensuring that best practices are displayed at all levels to meet the challenges of this pandemic.”
The window that prevented landlords from taking legal action against tenants who had not paid their rent (unless the amount owed was 189 days or more) was also extended until September 30. Landlords are also prohibited from sending their tenants statutory requests, formal requests for payment, or liquidation petitions – legal notices usually sent by a creditor asking the courts to close a business that owes him money – until fall.
Landlords have complained that some tenants are taking advantage of emergency measures to reduce rent. The code, which is voluntary, states that tenants should “continue to pay their rent in full if they are able to do so” and that others should “pay what they can”. Homeowners should support if they can, and both parties are encouraged to be transparent about their finances.
The code describes the options that could be considered to break the deadlock between the landlord and the tenant, including offering rental vacations or switching to a monthly rather than quarterly payment schedule. Landlords could also draw on rent deposits, on the understanding that they would not need to be “recharged” in the short term. Any reduction in service charges should also be passed on to tenants, she suggests.
Helen Dickinson, managing director of the British Retail Consortium, the industry’s trade group, said the foreclosure had created a “gaping hole” in the finances of many retailers. These woes have been exacerbated by the continued demands for rent on closed stores, she said.
The code did not provide a solution for businesses that were “simply unable to pay what is asked,” according to Dickinson. She said, “Without further action, retailers and homeowners remain in a precarious position which could result in significant layoffs after the protection of tenants expires.”