COVID-19 and the Extension of Restrictions on Recovering Possession of Commercial Premises
Julia Williams, 10th December, 2020
An unwelcome Christmas present for Landlords...
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.
As a result of the coronavirus pandemic, the Government introduced a number of emergency measures in the Coronavirus Act 2020, which came into effect on 25 March 2020. The measures included a temporary ban on forfeiture for non-payment of rent until 30 June 2020 (click or tap here for further information).
Since June 2020, the ban has been extended twice and was due to come to an end on 31 December 2020. However, on 9 December 2020, the Government announced that it intends to grant a final extension of the ban until 31 March 2021. The Government is also intending to extend the moratorium on the presenting of winding up petitions/serving of statutory demands on commercial entities and the restrictions on Commercial Rent Arrears Recovery (CRAR) until 31 March 2021. This will no doubt signal more misery for Landlords whilst providing an early Christmas present for struggling tenants.
However, all is not lost. The Act does not suspend the tenant’s obligation to pay rent or prevent forfeiting for non-financial breaches of the lease. Landlords can therefore still:
- Forfeit for other breaches (e.g. non-financial breaches)
- Issue debt proceedings for the rent arrears and obtain CCJ’s
- Serve notice upon former tenants and their guarantors requiring them to pay the arrears of rent providing notice is served within 6 months of the arrears falling due.
Legal advice should always be sought before attempting to forfeit a lease or taking any of the steps above.