In April 2020, the government introduced measures to protect shops, restaurants, cafes, and takeaways from aggressive rent debt collection by landlords.
The law, which prevents landlords from presenting petitions or winding-up orders, where the lack of payment is a direct result of the tenant’s business having been impacted by covid-19; has now been extended until 31 March 2022.
The government said it plans to introduce a ‘rent arbitration scheme’ to deal with rents accrued over the last 17 months, since the beginning of the pandemic.
Since the start of the pandemic, the hospitality industry has accrued £2.5bn in rent debt, with only 10% of hospitality businesses being able to pay rent in full throughout.
New measures will also be brought in, as a means of preventing smaller companies from entering insolvency and will take effect from 1 October. These will protect businesses from creditors insisting on repayment of small debts by raising the current threshold for a winding-up petition to £10,000 or more.
Creditors will also be required to seek proposals for payment from a debtor business and must give them 21 days to respond before they can begin winding-up action. This measure will also remain in place until March 2022.