Extension of moratorium on statutory demands for commercial landlords

The Government has announced a further extension (previously expiring on 30 September) to restrict commercial landlords from pursuing a tenant’s rent arrears through issuing statutory demands. The new extension will expire in March 2022, at the same time the ban on forfeiture will be lifted, and when the new arbitration system on arrears will come into play.

The moratorium was first put in place to allow businesses and tenants breathing space to take steps to recover from the pressures experienced because of the pandemic, without the threat of being wound up. It meant that landlords, and other creditors, could not serve a statutory demand or present a winding up petition against a debtor unless they had reasonable grounds for believing Covid-19 had not had a financial effect on the business, or that the debt issues would have arisen in any event. The largely blanket ban meant that businesses could continue to trade, without there being the threat of aggressive enforcement.

The Government has also announced, for other non-rent related debts, that the moratorium will not be extended, but there will be two changes that a creditor will also have to apply:

1. The threshold to serve a statutory demand will increase to £10,000 (currently £750 for companies)
2. The creditor will be required to seek proposals for payment from the business and allow 21 days before they are allowed to wind the company up.

The Government has said these changes reflect the high street opening up again, but still allowing small businesses to recover with protections. Whilst it is frustrating for landlords and creditors, the announcement was not unexpected.

For further legal support on commercial rent contact our dispute resolution lawyers.