The last couple of years has been tough for everyone, emotionally, physically, and financially. Thousands of people in rented accommodation have been left wondering if they’ll be able to keep a roof over their heads as their jobs either disappear or they’re put on furlough on less than their usual wage.
For small businesses, the situation has been even bleaker. With doors shut for months on end and custom slashed to zero during the height of the pandemic, there were thousands of businesses who still had overheads such as rent and business rates but no income whatsoever. The hidden cost of the pandemic could go on for years.
In the immediate future, though, another worry has raised its head. For months, the government mandated that evictions were to be halted in both the domestic and the commercial sectors. Then, as the crisis started to ease and our lives opened back up, the concern was that thousands of domestic tenants and business tenants alike would be forced out of their homes and business premises.
Business tenants – an extension until 2022
Business tenants currently have a little bit of breathing space. The government has extended the ban on evictions of businesses who stopped paying rent during the crisis until March 2022, to give them a chance to try and rebuild their businesses, and, hopefully, clear their arrears.
However, while business owners are perhaps breathing a little sigh of relief over the extension of the moratorium, landlords are deeply unhappy that it could allow some businesses to withhold paying their rent for a further nine months. The bill to landlords could be astronomical, leading in some cases to financial hardship and even bankruptcy.
The somewhat-optimistic government plan is for businesses to ‘trade their way out of debt’, but with such a dramatic change in the way people shop, is that even possible? Landlords think it’s not, and are increasingly concerned about the prospect of tenants racking up even more rent arrears all the way through to next March.
Landlord associations are accusing the government of ignoring the plight of the sector, and while the ‘orderly resolution’ of debts will be tackled by a raft of new legislation, there’s no guarantee that it will help either business tenants or, in particular, landlords facing financial hardship as a result.
What about residential tenants?
For residential tenants, things are not so secure. While evictions were banned under the Coronavirus Act 2020, as of the end of May, landlords were allowed to start serving eviction notices as long as they gave tenants a minimum of six months’ notice. In cases of domestic abuse, violence or anti-social behaviour, or where tenants had accrued over six month’s rent arrears then landlords could evict sooner.
From June 1st 2021, the notice period shortened to four months, and from 1st October 2021 the notice period for cases where there are less than four months’ arrears drops to two months. As of 31st May, bailiff enforcement (which had previously been suspended) was re-introduced, but with the proviso that bailiffs must give 14 days’ notice of an eviction enforcement.
A legacy of debt and misery
Nobody has come out of the pandemic as a winner. For landlords, they’ve seen their rental income slashed to the bone, and face the prospect of costly court cases to try and recoup some of the arrears they’re owed by both domestic and commercial tenants.
For residential tenants struggling to pay their rent, the threat of eviction is now once again very real. And for businesses currently on their knees, they face the prospect of ploughing every penny they earn not into developing their business, but paying off months of rental arrears with no guarantee that they’ll still be able to carry on trading at the end of the pandemic.
Covid-19 has killed hundreds of thousands of people in the UK. But another underlying tragedy of this pandemic is only just starting to emerge. If you’re a tenant facing eviction, or a landlord desperately trying to get your tenants to pay their arrears, talk to one of our property law team today.