Further guidance on commercial property measures – Coronavirus (COVID-19)

Thursfields Solicitors has issued further guidance to commercial tenants following Royal Assent for the Coronavirus Act 2020.

Tony Gibb, Director and Head of the Commercial Property team said: “The Government has acted swiftly to try and protect commercial tenants, with the intention of securing continuity for high street and other businesses when the current restrictions ease.”

“It is common sense for landlords and tenants to have opened a dialogue in any event, but this gives those discussions some structure and will help both parties plan for the coming weeks and months.”

The main points are as follows:

1. The new rules protect commercial tenants, who are unable to pay their rent, from the risk of forfeiture until at least 30 June 2020;

2. The measures apply until 30 June 2020 but could be extended. This means a landlord’s right to forfeit for non-payment will be suspended until at least 30 June 2020;

3. Providing the landlord does not give any express waiver in writing, the right to forfeit is still preserved albeit delayed. A landlord should still be able to forfeit for non-payment of rent if it is not paid after 30 June 2020;

4. The rules relate to any sum the tenant is liable to pay under any relevant business tenancy. In addition to the annual rent, this could include insurance, service charge, interest and any other sums which fall due;

5. The rules do not apply to forfeiture for any other breach of covenant. Neither would they prevent a landlord from taking any other action to recover payment say, by serving a Statutory Demand as a precursor to a bankruptcy or winding up petition or, by issuing court proceedings or, seizing goods under the Commercial Rent Arrears Recovery Regime (CRAR) although the latter may be difficult to exercise. It doesn’t affect the landlord’s ability to claim interest under the lease on any late payments;

6. The rules also affect any ongoing forfeiture proceedings for non-payment of rent. The courts will not be able to order a tenant give up possession before 30 June 2020. If a possession order has already been made and the date for possession is before 30 June 2020, the tenant can apply to vary this to a new date after 30 June;

7. Landlords will not be able to rely on the tenant’s failure to pay rent during the three month period as a ground to oppose a renewal of a business tenancy for persistent delay in paying rent.

Tony added: “Clearly these are worrying times for everyone in business but it’s important to keep a clear head and work through the new provisions step-by-step. Thursfields is here to help and advise, the firm remains fully operational and ready to answer your queries.”

For advice from Thursfields’ Commercial Property team, call Tony Gibb on 0345 20 73 72 8 or email him at tgibb@thursfields.co.uk.