COVID-19 and recovering possession of commercial premises: A quick guide for landlords
Julia Williams, 24th April, 2020
Forfeiture is a landlord’s right to bring a lease of commercial premises to an end and recover possession, if the tenant breaches the terms of their lease. The right is only available in specified circumstances including, most commonly, when a tenant has failed to pay rent.
Part two of a three-part blog for commercial landlords:
As a result of the coronavirus pandemic, the Government introduced a number of emergency measures in the Coronavirus Act 2020 (“the Act”) which came into effect on 25 March 2020. The measures include a temporary ban on forfeiture for non-payment of rent until 30 June 2020.
The temporary ban applies to all agreements with business occupiers i.e. leases, agreements for lease etc. It not only prevents landlords from commencing forfeiture proceedings, but it also prevents forfeiting by peaceable re-entry for non-payment of rent.
Any existing forfeiture proceedings i.e. those commenced before 25 March 2020 are stayed and all evictions are to be put on hold until 30 June 2020 with the possibility that the UK Government will extend the period further. There will inevitably be delays in getting possession beyond the restricted period whilst the backlog of possession proceedings are processed.
The Act does not prevent landlords from forfeiting for breaches of the lease other than non-payment of rent, such as allowing the property to fall into disrepair. However other legislation does place restrictions on that and specialist advice should be sought before relying on such breaches as grounds for forfeiture.
Landlords should note that the tenant’s obligation to pay rent is not suspended and the Act itself does not prevent other legal steps being taken to recover the rent. However, on 23 April 2020, the Government announced it intends to place further restrictions on the use of statutory demands, winding up petitions and the use of Commercial Rent Arrears Recovery (CRAR) as aggressive rent collection tactics by landlords. See our related note here.
Legal advice should always be sought before attempting to forfeit a lease.