2020/NO.05 - The Ministry of Housing, Communities & Local Government and the Department for Business, Energy & Industrial Strategy announced (23rd April) temporary new measures to safeguard the UK high street against aggressive debt recovery, including Statutory Demands and Winding Up petitions. Changes are also to be made to Commercial Rent Arrears Recovery. Tenants will be asked to pay what they can during the lockdowns of COVID-19 whilst all these actions are in suspense.
This of course is welcome news indeed and in theory gives time for businesses to keep afloat and find a way to work with landlords. But will it? An aggressive landlord will not suddenly become benevolent because the Government has put a temporary block on his harsh tactics. Far from it because the accruing debt will continue to mount. If the action is against a Limited Company the increasing debt can be ring fenced. If however, the action is against an individual or partnership linked to personal guarantees the debt increase will inexorably keep increasing against the security. If a business is closed and not trading it is difficult to see how any additional debt servicing can be created out of thin air.
Yes there are a number of benevolent landlords out there in the hospitality industry but also a few downright nasty ones as well. This also leeches into deferred rents and the inevitability of eventual payment. The only way to take the pressure off tenants in distress is for Government to cancel the payment of rents while the pandemic lasts. There is no middle ground.