27/04/2020

Thursfields notes further relief for commercial and retail tenants

John McLean Blue Tie

Thursfields advises of government intervention to help commercial and retail tenants under pressure from the continuing COVID-19 pandemic.

John McLean, a senior associate in Thursfields’ commercial property team, said the Coronavirus Act 2020 had already prevented forfeiture action by landlords for non-payment of rent until 30 June 2020.

“This provided relief for many, but was not sufficient for some commercial tenants, who still faced action from landlords threatening to bring up winding up proceedings if payments of rent were not made,” he said.

He welcomed the announcement by the Government (Thursday 24 April) that it was introducing measures to further clarify the position for tenants with their rent due given the current unprecedented strain on finances.

“The new legislation curtails the legal action a landlord can bring for non-payment of rent in the current period, again up to 30 June 2020. This period is extendable in the same way as the ban on forfeiture proceedings.

The Government has announced that any winding up petition that claims the company is unable to pay its debts must first be reviewed by the court to determine why this is the case. The law will not permit petitions to be presented, or winding-up orders made, where the company’s inability to pay is the result of COVID-19.

Mr McLean added: “Legislation will also be brought forward to prevent landlords using commercial rent arrears recovery (CRAR) unless 90 days or more of unpaid rent is owed.”

He pointed out that landlords, with no rent rolling in, also faced unprecedented challenges.

The Financial Conduct Authority, the Financial Reporting Council and the Prudential Regulatory Authority have issued a joint statement encouraging investors and lenders to take account of issues arising directly from COVID-19 in responding to potential breaches of covenant. 

He said: “This may provide some help for landlords, who are in many cases struggling to pay their mortgages because tenants have not paid the rent.

“Tenants and landlords are recommended to make sure they take the right advice at this difficult time.  All parties are encouraged to remain in dialogue, so that everyone can get through the crisis together. 

“Our commercial property team is on hand to help, and can advise on steps that can be taken.  We are currently helping landlords and tenants document agreed rent reductions or deferrals, and can also give advice on litigious options if tenants or landlords are refusing to co-operate.”

Anyone with concerns on rental issues can contact John McLean on jmclean@thursfields.co.uk, or call 0345 20 73 728.

John McLean - Colour

John McLean,

Senior Associate Solicitor, Telecoms & Commercial Property

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