UK to extend ban on evicting commercial tenants

Ministers are to extend a ban preventing landlords from evicting struggling commercial tenants until the summer as part of a package of measures to help hard-hit businesses chart a path out of the coronavirus lockdown.

Shopkeepers, restaurateurs and hospitality businesses will be afforded protection from eviction until the end of June — three months later than currently planned — according to government officials. 

The Financial Times reported on Monday that chancellor Rishi Sunak is to use next week’s Budget to extend a widespread package of existing support measures until June, ranging from the job support scheme to business rate relief.

The chancellor’s Budget statement is also set to include measures to support first time buyers, who were frozen out of the housing market last year as lenders pulled many of their riskiest mortgages, according to a senior government official. 

It was reported on Wednesday that this will also include the current stamp duty holiday on home purchases.

Sunak’s decision to extend the various support programmes comes after Boris Johnson set out a “road map” out of the current lockdown in England. Under that phased timetable non-essential shops will not reopen until April and hospitality will not fully return to normal until mid June. 

The extension of the eviction moratorium provides breathing space for businesses, but does little to tackle the billions of pounds of unpaid rent across the hospitality and retail sectors which has built up in the last year. 

The debt pile is “existential” for businesses, said Hugh Osmond, the entrepreneur who formerly led PizzaExpress and founded Punch Taverns. “There is no alternative but a government mandated solution,” he said. “For a quarter of businesses it’s straight life or death.”

UKHospitality, the trade body, warned that about 40 per cent of hospitality operators had not reached an agreement on rent reductions or deferrals. The government had to use the extension of the moratorium to “facilitate an exit strategy otherwise you will kill the recovery in the bud”, said Kate Nicholls, UKHospitality’s chief executive.

The commercial eviction ban has been in place since March last year, and ministers had insisted that the previous extension — announced in December — would be the last.

Property owners have complained that the ban is a blunt tool that has given cover to some large tenants to avoid paying the rent they owe, leaving landlords and investors in commercial property facing £4.2bn of rent arrears. 

Melanie Leech, chief executive of the landlord trade body the British Property Federation, said the moratorium had created a “hostile environment” in which well-capitalised businesses are “openly ignoring their rental obligations because property owners have no redress”.

Fears that lifting the ban would result in a wave of evictions were ill-founded, she added, because “no property owner wants empty space it cannot re-let as the building will not generate income and the property owner will face punitive [business rates on empty units].”

Meanwhile, the Treasury did not deny a report in the Times newspaper on Wednesday that the stamp duty holiday will continue until June. 

Sunak has faced growing pressure to extend the holiday, which was due to end on March 31. Introduced in July to kickstart the housing market, the holiday has meant that buyers have paid no purchase tax on the first £500,000 of a home. The previous threshold at which the tax kicked in was £125,000.

The reported extension was welcomed by estate agents, who have warned that tens of thousands of buyers were at risk of missing out on a tax saving thanks to bottlenecks in the sales process because surveyors, conveyancers and estate agents have been overwhelmed by demand, slowing down sales.