High street bosses call on government to close ‘vindictive’ rent debt loophole
Retail and hospitality bosses have criticised the government for not banning a loophole used by landlords to chase commercial tenants for unpaid rent.
Industry representatives said new measures left a vindictive loophole in protections for commercial tenants.
The groups welcomed news that protection from statutory demands leading to winding up petitions will be extended to March 2022 for commercial rent arrears.
“While the vast majority of retailers and landlords have agreed rent payment plans, a small minority of landlords are undermining the spirit and intention of the protections and exploiting the County Court Judgement loophole,” Helen Dickinson, chief executive of the British Retail Consortium said.
Trade body UKHospitality said the government had missed an opportunity to crack down on landlords using the judgements in a bullying manner and urged it to close the loophole imminently.
However, bosses said extra measures would help beleaguered high street businesses as they attempted to recover from the financial hit of lockdowns.
New legislation will protect high street firms from creditors insisting on repayment of small debts by temporarily raising the current debt 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, giving them 21 days for a response before they can proceed with winding up action.
“It is right and fair that the economic pain of the pandemic – in which hospitality was one of the worst affected sectors suffering long periods of forced closure and restricted trading – should be shared between landlords and tenants.
“This move will save thousands of businesses and jobs, and is a key step on the way to recovery for both the sector and the country,” UKHospitality chief executive Kate Nicholls.
Business minister Lord Callanan said the time had come to lift the insolvency restrictions needed during the pandemic with temporary measures to be phased out from October 1.
Vaccines meant the economy was experiencing a “strong rebound,” the minister said.
“At the same time, we know many smaller businesses are rebuilding their balance sheets and reserves, and some will need more time to get back on their feet. These new measures will help them to do that.”