The commercial rent moratorium due to end this month has now been extended until 25 March 2022, to help protect businesses still struggling as a result of the pandemic. 

The moratorium was introduced in April 2020 to help struggling businesses through the pandemic and has since been extended twice. Today's decision comes in the wake of the government’s decision to delay the easing of lockdown restrictions until 19 July 2021 at the earliest.

Alastair Lomax, partner and head of TLT’s restructuring practice, said of the news:

“The UK Government is in an invidious position. Covid has set two key components of the UK economy – commercial landlords and their tenants – at loggerheads.

“The rent moratorium is a trade-off. We avoid Armageddon today but at the risk of inflating the commercial debt bubble to toxic levels in the long-term.

“Coming in the wake of the deferred release of trading restrictions, commercial tenants, particularly in the hospitality and retail sectors which have faced such a battering from Covid, will welcome the extension as much as many landlords will oppose it. Landlords, in which many UK pensions are invested, may wonder when it will be their turn to receive support.

“The proposal for an arbitration mechanism indicates that Government is alive to the systemic economic risk posed by this issue over the long-term and the spike in disputes and business failures that could arise as a consequence. It will be intriguing to see how the arbitration might work and whether it will offer a more attractive route for debt-laden commercial tenants than the potentially quicker “fix” of a formal restructuring or insolvency process.

“While today’s announcement undoubtedly provides a lifeline to many businesses and provides them with extra time to strengthen their coffers, tenants and landlords must continue to engage in positive dialogue to agree outcomes that allow both parties to return to a situation of financial health once normal market conditions resume. Mutually beneficial agreements can and must be found on a case by case basis and it is in the interest of all parties to strive to reach these before turning to arbitration or litigation.

“There is a huge amount at stake and much remains to be done but, in halting a potential avalanche of insolvencies and job losses, today’s news provides hope.”

Further analysis of the extension of the commercial rent moratorium to follow.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2021. Specific advice should be sought for specific cases. For more information see our terms and conditions.


Date published

16 June 2021

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