Emergency coronavirus bill passed for landlords and tenants
The government has announced temporary measures to protect commercial tenants from eviction for unpaid rent.
- Whilst many landlords and tenants are already having discussions about rental payments, the proposed legislation will provide greater protection to businesses worried about eviction as a result of the impact of the current coronavirus crisis.
- The measures will mean that business tenants cannot be forced out of their premises if they miss a rent payment in the next three months. Landlords will not be able to exercise the right of forfeiture for non-payment of rent (including other payments due under the lease which are reserved as rent) that arises during the Relevant Period.
- As it stands, there is no fetter on a landlord's other rights to recover rent such as the service of a statutory demand or debt claim. Commercial Rent Arrears Recovery (CRAR) is also not restricted (although this is less likely in practice if the property is already closed). If a debt is undisputed a landlord would also technically not be prevented from proceeding straight to a winding up application. Many landlords - particularly those with strong social governance credentials - are open to conversations with their tenants about rent payments in these unprecedented times. Tenants would however be unwise to rely upon landlords being reluctant to exercise these remedies, which have not been prohibited by the draft Bill.
- The measures in the Bill do not waive the right of re-entry or forfeiture, which will only be delayed. Tenants will still be liable for the rent during this time and landlords will still have a right to forfeit after the Relevant Period ends.
- For any forfeiture proceedings commenced before the Relevant Period, the Courts must not make an Order for the tenant to give possession to the landlord before the expiry of the Relevant Period. If such an Order has been made, it is to be treated as extended.
- For the purpose of opposing the grant of a renewal lease under the Landlord and Tenant Act 1954, any failure to pay rent during the Relevant Period is to be disregarded if a landlord is seeking to rely on the statutory ground of persistent delay in paying rent.