COVID-19: Further Protection for Commercial Tenants

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The government has announced that it is further extending the rent protection period for commercial tenants which was initially introduced in March 2020.

Section 82 of the Coronavirus Act 2020 contains protections for business tenancies which restrict a landlord’s ability to forfeit a lease during the relevant period for the non-payment of rent but not for other breaches.

The relevant period began on 26 March 2020 and was due to end on 30 September 2020, but regulations have been made which now extend the period to 31 December 2020.

Businesses, particularly in the hospitality sector, need further time for recovery. On 16 September 2020, the Communities Secretary announced that businesses will be protected from the threat of an eviction until the end of the year.

This will enable businesses to rebuild over the autumn and the crucial pre-Christmas trading period.

The government is still advising that, if tenants can pay their rent, they should do so because the moratorium is intended to help businesses which are struggling as a result of the pandemic.

The Taking Control of Goods (Amendment) (Coronavirus) comes into force on 29 September 2020. The regulations further increase the minimum amount of unpaid rent that must be outstanding before a landlord can use Commercial Rent Arrears Recovery (CRAR) to discharge rent arrears by taking control of and selling a tenant’s goods.

As a result of the regulations, the equivalent of 276 days’ rent must be outstanding before CRAR can be exercised, and after 25 December 2020, the equivalent 366 days’ rent must be outstanding.

The service of statutory demands and winding up petitions have not been dealt with in the most recent regulations.

Over the coming months, landlords and tenants may seek to agree alternative arrangements in light of the pandemic and we have looked at the options in an earlier article: Re-Gearing Leases During COVID-19

The government has also published a Code of Practice to assist landlords and tenants following the impact of COVID-19 and this document is intended to promote good practice: Code of Practice for commercial property relationships during the COVID-19 pandemic

If either party fails to follow the guidance and does not engage in negotiations, then this could potentially be brought to the court’s attention if proceedings are issued.

For more information and to find out how we can help you, please contact us on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.