Proposal to withdraw moratorium on enforcement action for commercial property
This week we have been delighted to work with British Land and the British Property Federation to put forward a proposal to Government on how to withdraw the moratorium on enforcement action and accrued arrears.
This proposal is a practical solution, with the interests of all parties at its heart. It protects jobs, supports those businesses who need support and gets the market back to normal operation.
While the debate around the moratorium to date has been very polarised, we wanted to come together to offer a constructive way forward for Government that would address their concerns around potential job losses resulting from its withdrawal.
Our proposed solution separates the treatment of rent arrears from the period when businesses were impacted by trading restrictions from future rents as the current restrictions lift.
With the final step in the roadmap scheduled for June, normal market rent operations should resume. This reflects not only a vital step towards restoring normal market conditions, but also the strength of trading that many brands have seen since the third lockdown began to lift.
The proposal would ringfence historic arrears extending existing protections in relation to these arrears to December 2021 and enabling property owners and their customers to agree concessions where appropriate. Payments could be deferred until after this date if an agreement has been reached. Where an occupier and property owner are unable to reach a settlement, they would then submit to binding arbitration.
Given the complexities of the market – and based on our experience – we believe that the negotiation remains the best way to address arrears. However, to speed resolution – and to inform the arbitration backstop – we have proposed an enhanced code of practice to give guidelines for the negotiation.
We believe this phased approach would address the issue of rents owed, while giving occupiers the breathing space they need to recover from the effects of the pandemic, provide property owners with the certainty required to enable new investment into town and city centres, and help drive economic recovery from Covid-19.
We look forward to working with Government, our peers and our brand partners to make it a success.