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The government has just announced that the ban on commercial evictions introduced to help badly affected businesses survive the pandemic will be extended until March 31 2021. Assuming it is not extended again when that date is arrived at it would mean that the ban would have been in place for more or less exactly one year by the time it comes to an end. The move highlights a real problem though. Many affected businesses have seen severely depleted revenues during the pandemic which means that there is insufficient funding left over to pay their rent bills. Perhaps unsurprisingly many landlords have been unhappy at the situation and in some cases have suggested that tenants have been refusing to pay their rent even when they were able to do so. There have been counter-accusations too including a suggestion that landlords have been cashing in property deposits when any rent due has not been paid.

Two sectors in particular have benefited from the concession, namely hospitality and retail. On the other hand they would rightly claim that they have also been worse affected by several phases of lockdown than most other businesses. It is good news though particularly for the retail sector which is hoping that the Christmas period will do something to restore their battered fortunes. There is though a sting in the tail. The concession stops commercial tenants from being evicted but it does not mean that they will not have to pay back their bills sooner or later. This was a problem highlighted this week by UKHospitality a body which represents bars, pubs, restaurants and hotels and the like which was arguing for an extension to June next year. It estimates that by the end of 2020 the level of rent debt will be in the region of £1.6 billion.

Kate Nicholls the chief executive of UKHospitality is worried that the extension is too short to deal with the problem and also argues that too many landlords have proved unwilling to negotiate. No doubt though landlords would argue that they are being unfairly disadvantaged when they have been hit so badly by the pandemic in terms of unpaid rent. Perhaps they are a sector which is unlikely to attract much in the way of public sympathy but nevertheless they do have a point. The worry above all though is that by the time that the concession comes to an end whenever that finally might be some businesses will be so heavily laden with debt that paying it back will create another financial crisis for them. The long term effects of the pandemic on the sector in particular are likely to drag on for months or even years after it has hopefully come to an end.

Wayne Bartlett is an author for accountingcpd. To see his courses, click here.

  1. Shu kai C
    Posted 23-Oct-2021 at
    The cities were locked down and business suffered the no income period. Even though rental expenses shares a significant portion of fixed expenses, business cannot survive without customers. This should be short term policy.
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