Rule change could prevent retailers exiting rental properties

By

Nigel TAYLOR

Published
Nov 8, 2021

For physical retailers struggling to survive, this news will come as an additional blow. 
Under government proposals, UK tenants could be forced to stay in rental properties after their initial lease has expired.

This would lock them into paying rents they can’t afford on properties landlords want them to leave, according to a report in The Telegraph.

The government’s Department of Levelling Up, Housing and Communities (DLUHC) wants to require all landlords and tenants involved in a Covid dispute to go into arbitration to ease pressure on the courts under a new arbitration code. 

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However it will mean tenants who can’t agree a payment plan with their landlord could be ordered to remain in situ. 

The rules, which will be published in coming weeks following negotiations with landlords and commercial tenants, are intended to provide a framework for this process.

Existing legal cases brought by landlords attempting to sue tenants into paying rent will be declared void when the new code is introduced, sources told the newspaper.

The rules will give extra protection to commercially viable businesses, but there will be no presumption that landlords should automatically suffer a rent cut, even if the landlord has remained far more profitable than the tenant.

The ban on tenants leaving a property is likely to prove controversial, with warnings that tenants could be locked into unaffordable rents.

Helen Dickinson, chief executive of the British Retail Consortium, said: “While we support the principle of compulsory arbitration, the devil is in the detail. The most important questions to answer are the extent to which tenant businesses will be required to pay rent for stores they weren’t allowed to open, and what scope arbitrators will have to impose payment plans that neither party actually wants.”