27/03/20

Extra Protection for Businesses with Ban on Evictions for Commercial Tenants who miss Rent Payments

The Government has enacted their Coronavirus Act 2020. Part of the Act (beginning section 82) gives protection for tenants of commercial premises who are at risk of forfeiture until the end of June 2020. This means that there is a ban on evictions for commercial tenants before this date’

Prohibition on Forfeiture

The Act provides that a “right of re-entry or forfeiture, under a relevant business tenancy, for non payment of rent may not be enforced, by action or otherwise, during the Relevant Period.”

For the purposes of the Act, the Relevant Period means the day beginning with the day the Act was passed and ending on 30th June 2020 or “such later date as may be specified by the relevant national authority and regulations…”

Therefore, this legislation allows any commercial tenant, whether in the retail or leisure sectors or otherwise, and no matter what their financial position, the opportunity to avoid paying the March 2020 quarter’s rent and any other rent payments falling due until the end of June 2020, without risk of forfeiture.

The landlord’s right to forfeit is effectively suspended.

Forfeiture proceedings

If a landlord has already started forfeiture proceedings for non payment of rent then the courts will not be able to order the tenant to give possession before 30th June 2020.

Renewal of Business Tenancies

A landlord should not be entitled to rely on a tenant’s non payment of rent during the relevant three month period, to oppose renewal of a business tenancy under the Landlord and Tenant Act 1954.

Other remedies

The Act does not appear to prevent Landlords taking other action against a tenant for non payment of rent, as the legislation only applies to a landlord’s right to forfeit. They do not suspend a tenant’s obligation to pay rent.

A landlord could still serve a Statutory Demand for rent or take action to seek judgment through the courts for unpaid rent, however, it may be difficult to practically take any steps given the current lock down.

Keep Talking

The advice would be for landlords and tenants to talk to each other about their respective predicaments.

Tenants will have effectively obtained a rent moratorium but rent will have to be paid ultimately.  Overall, it would seem sensible in the present circumstances if both landlord and tenant were to find solutions to balance their interest to enable both to survive in the present unprecedented circumstances.

Kitsons Solicitors - James Cross

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27/03/20

About the author

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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