UK Government Bans Aggressive Rent Collection Amidst The Lockdown

The British Government has come to the rescue of businesses who have been compelled to pay rent under the ‘aggressive rent collection’ legal practices adopted by some landlords to extract rent during the ongoing coronavirus crisis.

In response to the reports coming in about the landlords who have sent foreclosure notices to businesses failing to pay the rent of March 2020, the UK Government banned legal actions against tenants stating landlords are prohibited from filing any winding-up petition or raising statutory demands for rent recovery till 30 June 2020. Beside these new directives, the Government also has previously, at the time of announcement of stimulus packages during the beginning of March this year, requested landlords across the country to be lenient for rent delay on their tenants who may be struggling through the economic turmoil due to the fallout of coronavirus pandemic.

The COVID-19 which had started to cast its dark shadow on the United Kingdom since the middle of February had grown into massive proportions since then. Till now the pandemic has infected nearly 144,000 British citizens and killed nearly 19,500 of them. To curtail the spread of the virus, the British government had imposed a lockdown in the country in the second half of March, however given the increasing severity of the spread the lockdown had been extended by three weeks following a review meeting held last week. Since the time the lockdown has been imposed in the country, almost all industries have been witnessing a massive fall in their revenue levels, to the effect that several of them have come to the brink of going bust and have been seeking urgent state-backed financial aid.

The British Government has been actively working to flatten the curve and safeguard business from collapsing. It has launched several fiscal and monetary measures to protect its people, businesses and nation’s economy altogether. One of the major component in these measures is the government’s consent to allow tenants more time to pay for their rents and utility bills in consideration to their incomes being badly hit from the government’s decision to implement countrywide lockdown in a bid to contain virus. While making such requests in the beginning of March to landlords and banks and utility providing companies, the government expected that everybody will abide by its intentions. But as time passed, problems started to emerge both with the banks following up with the government’s stimulus packages and the landlords harassing their tenants for rent arrears.

Not all businesses in the country are high net worth owners, some are small and highly dependent on their cash registers. These businesses either on a daily basis or on a weekly basis restock provisions and pay wages to their staff. When the pandemic lockdown started, the number of people frequenting these establishments became almost nil, and the cash registers of these businesses started to dry up. These businesses reportedly have no enough money to pay for the next month’s rent unless their business activities gets up and running like in normal scenario. It is these businesses which during these exogenous times require the maximum support so that they are able to sail through this crisis with the potential to provide employees some degree of financial security to feed and protect their families through these tormentuous times. There is no dispute between the government and the landlords that these are the businesses that need to be protected. The landlords are also lending a helping hand in implementing the government’s intentions. However, the eye of the storm are the businesses who are doing well despite the pandemic crisis and the businesses whose owners have deep pockets. It is considered unethical on their part to take advantage of the governments schemes instead of contributing to the efforts of the government and the others who are trying to help businesses in need and to protect the jobs of people who are on the verge of unemployment.

The Furloughing scheme that has been announced by the government in March has given most of the businesses in the country the much-needed breathing space. The scheme was conceptualized when it was felt that small and medium business would be worst impacted because of the pandemic due to the lockdown imposed by the government. Under this scheme, the government entailed that businesses who were suffering revenue losses could avail of the scheme where the government will be bearing 80 per cent of the salary costs of their retained employees amounting to a maximum of £2,500 per employee till the end of May which now has been extended for three weeks.

Though the government at the time of making the announcement had only made a request to landlords and utility providers, but a formal order regarding the same has been released now. The landlords have started to institute foreclosure proceedings against their tenants during coronavirus crisis. It is also not in the best interest of the landlords if they evict any of their tenants at this stage. Given the situation what it is going to become in a few months from now it will be difficult for them to find new tenants or get the same rates of rent that they are currently getting. The British economy is reported to shrink by nearly 35 percent in this April to June quarter, and by 13 per cent for the year overall. Some impact of this shrinkage of the economy is expected to fall on the rental commercial real estate sector.