01/10/20

Government Extends Protection for Commercial Tenants During Covid-19

The Coronavirus Act 2020 (“the Act”) came into force on 25th March 2020. This included protection for commercial tenants, and this has now been extended until the end of the year.

For landlords and tenants in England and Wales, the Act immediately prevented a landlord from terminating certain tenancies by forfeiture for non payment of rent until the 30th June 2020.  This date was extended to 30th September 2020.

The Government has recently announced that a moratorium on a forfeiture of business tenancies will be further extended until 31st December 2020.

It should be noted that powers remain available in the Act for further extensions of this date.

The restrictions apply to forfeiture by the landlord instructing a bailiff to change the locks as well as to forfeiture via proceedings in court.

What commercial tenancies to the restrictions apply to?

The Act states that the restrictions benefit any business tenancy to which Part II of the Landlord and Tenant Act 1954 applies.  The explanatory notes accompanying the Act confirm the Government intended it also to apply to leases where the protection of the 1954 Act is excluded and provisions also seek to cover lawful sub tenants.

What about service charges and insurance?

The definition of a rent extends to any sum payable under the business tenancy including insurance, service charges and interest.

Waiver of right to forfeit

The Act states that the landlord’s conduct (that is discussions with commercial tenants as to sums owed) during the relevant period, that is 25th March 2020 to 31st December 2020, will not be treated as waiving the right to forfeit for non payment of rent unless the landlord gives an express waiver of the right to forfeit in writing.   The Act states that the right to forfeit will be preserved for the non payment of rent.

There is a voluntary code which the Government published on 19th June 2020 for commercial property arrears during the Covid 19 pandemic which the aim of facilitating discussions between landlords and tenants.

Existing forfeiture proceedings

Under the Civil Procedure Rules, a stay on possession proceedings and enforcement of orders for possession was effected until 20th September 2020, but has now been lifted.  Nevertheless the restrictions of the Coronavirus Act 2020 means that the landlords are still not entitled to issue any forfeiture proceedings for arrears which fell due since 25th March.   Under the Act and regulations, Courts will not be able to make a possession order which requires a tenant to give possession of business premises for non payment of rent to the landlord before 1st January 2021.

Kitsons Solicitors - James Cross

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01/10/20

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Kitsons Solicitors - James Cross

James CrossPartner and Chairman

James is a Partner, Chairman of Kitsons and Head of our Litigation team

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