Tomorrow, Friday 1 May, is the first significant rent payment day in the North since the start of the COVID-19 lockdown. 

While the rent collection remains unclear, DWF commercial partner in Belfast James Morrison said that the day is a reality check.

“Until the end of June at least, landlords face a period where the rent they are owed is still due and should be demanded. 

“Under current legislation however, the usual actions they would take against tenants for non-payment have been taken away from them – and this includes forfeiting lease arrangements should rent be unpaid.”

The UK government has advised that new insolvency legislation will void any statutory demands and winding up applications made by landlords for unpaid rent. 

Adjourned

The removal of this option is unlikely to have much effect in Northern Ireland where courts have adjourned all existing bankruptcy hearings and confirmed that all winding up petitions cannot be issued unless they are urgent.

DWF says that, in its experience, an unpaid rent bill is very unlikely to meet this criterion.

James added: “Understandably landlords are now expressing frustration.

Cash flow issues 

“If tenants are not paying rent or service charges, a landlord could face considerable cash flow issues which in turn could impact on the re-opening of retail schemes once the current lockdown is lifted.”

Rescue measures have been proposed by some landlord groups, including a scheme whereby the government subsidises the tenant's rent in proportion to its forecasted loss of turnover.

As yet, there has been no response to such proposals from the UK government.

Consequences of non-payment 

“None of the government measures currently in place cancel the rent which has fallen due. It is only the consequences of non-payment which have been suppressed,” said James.    

“Tenants who wish to or are able to manage their cash flow may elect to continue paying rent.  

“Those who do not could find that once this lockdown on landlord enforcement is lifted, they may suddenly face statutory demands, winding up and bankruptcy petitions, some of which may be for sizeable arrears amounts.  

Insolvency legislation

“It is at this stage that tenants will look to the proposed new insolvency legislation to clarify what protections they have against further landlord action.

“This legislation (which is expected imminently and will be reviewed keenly) will go some way to dictating the future shape and layout of the high street, but one thing is certain, it is destined to be a very different retail landscape.”