Small commercial landlords set to suffer as result of new insolvency proposals

25 May 2016

Plans by the government to create a three month moratorium free from enforcement and legal action by creditors for insolvent businesses have been branded as “damaging” by the commercial landlord community. 

The measures, which were introduced in a consultation document issued by the Department of Business, Innovation and Skills today, could leave landlords open to abuse, as unlike other suppliers they will not have the ability to terminate contracts during three month moratorium period. Small commercial landlords, who are more reliant on rental income than large landlords, will be particularly affected by these proposals.”

The British Property Federation (BPF) has welcomed the release of the consultation, and the government’s continued commitment to introducing more fairness and transparency to the corporate insolvency regime, but would like to see the moratorium reduced to 21 days.

Melanie Leech, chief executive of the British Property Federation, said: “Allowing businesses three months to consider what steps they take next effectively means that commercial landlords will face uncertainty over expected income whilst being unable to mitigate potential losses. While this is not ideal for any landlord, small property owners will find these measures particularly damaging, as their income base is less diversified. A shorter moratorium would lessen this loss, and provide landlords with more stability.”