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Chris Tate

On Friday 19th June 2020, the government announced a planned extension to the Coronavirus Act measures to protect commercial tenants and a new code of practice for landlords and tenants. The expiry of the current restrictions (set out below) is to be extended from 30th June 2020 to 30th September 2020, giving business tenants further breathing space to negotiate with their landlord.
The existing measures designed to protect tenants of commercial property from aggressive rent collection, potentially pushing viable businesses into insolvency are as follows:
• Temporary ban on forfeiture (evicting tenants) for non-payment of rent. The existing ban on forfeiture relates to commercial leases and is effective from 25th March 2020 until 30th June 2020.
• Temporary ban on the use of statutory demands between 1 March and 30 June 2020 along with the temporary ban on winding up petitions presented from 27 April to 30 June, where a company cannot pay its rent bills due to coronavirus.
• Temporary ban on landlords using Commercial Rent Arrears Recovery (CRAR) unless they are owed at least 90 days (to be extended to 189 days) of unpaid rent (the previous minimum was 7 days of rent arrears).
The measures provide much needed relief for some tenants although may adversely impact many commercial landlords who now have fewer remedies to pursue rent arears.
It is important for tenants to recognise that these measures only serve to defer payment of rent and service charges. The concern is the new potential cliff edge of 30th September 2020 when tenants will have to pay these deferred liabilities unless further legislation is enacted to provide a mechanism for gradual payment of rent arrears. .
Whilst these measures bring options and flexibility for tenants, we recommend that tenants take legal advice if they have any concerns and also consider alternative options such as negotiating rent holidays or a switch from quarterly to monthly rent payments.