Trowers' property litigation weekly update


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This week the team report on the end of the general moratorium on forfeiting commercial leases for unpaid rent and the latest on the Commercial Rent (Coronavirus) Bill together with a case on restrictive covenants and the usual updates from around the firm.

The end of the general moratorium on forfeiture and the new arbitration scheme for protected rent arrears

We have reported previously on the moratorium on forfeiting commercial leases for non-payment of rent which was introduced to protect tenants who were unable to pay rent as a result of the pandemic. The aim was to allow tenants to try and reach an agreement with their landlords without the threat of eviction and to find a solution that was satisfactory to both parties, such as waiving some of the rent or agreeing a repayment plan for the full amount but over a longer term to allow the tenant's business to recover.

Whilst this has previously been extended by the Government, there have been no further extensions, and the general moratorium on evicting commercial tenants for non-payment of rent will come to an end on 25 March 2022.

This does not, however, mark the end of all restrictions on forfeiture relating to rent arrears which have accrued because of the pandemic and is due to be superseded by The Commercial Rent (Coronavirus) Act 2022 which is intended to be brought into force on the same day that the general moratorium expires.

The draft Bill passed its third reading in the House of Lords on 15 March 2022 and the House of Commons considered the final (clarificatory) amendment in session on 23 March 2022. At the time of writing, it is not yet known whether the amendment was approved by the Commons, but it is expected that the Act will be in force by the end of this week. Progress of the Bill can be followed here.

We have previously written about the Bill here.

As a reminder, the Bill introduces the concept of a protected rent debt (which includes service charge, insurance and interest on those sums). Protected arrears are those which have accrued during the period for which a business was forced to close as a result of government regulations made since March 2020. The Bill includes a ban on taking action (including Court proceedings, forfeiture and CRAR) in relation to those protected arrears.

If the parties cannot reach agreement in relation to the protected arrears, the Bill makes provision for either party to refer the matter to a binding Arbitration process. This process will determine what should happen to that debt (ie when and if it should be paid). It appears that the Arbitration process is going to be a rather powerful tool, allowing arbitrators to effectively re-write leases, write off debts or allow for payment over a period of time.

Further questions will inevitably emerge once the Act comes into force and the Arbitration scheme is put to the test. Please get in touch with Laura Vernon, Charlotte Brasher or any of your usual Trowers property dispute contacts if you would like to discuss this in more detail or would like advice on commencing the process of Arbitration for any protected arrears.

Colins & Anor v Howell & Anor

Newpark Stables near Totnes have found themselves on the losing end of a dispute with their neighbours. Having bought the stables the year before, in January 2020, the applicants received planning consent to construct an all-weather accessway from their existing stables to enable to them to exercise their horses. However, an existing restrictive covenant against one of their fields for the benefit of a neighbouring farm restricted its use to grazing sheep, horses and arable use. The owner of the neighbouring farm had originally applied the covenant to preserve the rural and agricultural character and tranquillity of the area.

The owners of the stables made an application in the Upper Tribunal (Lands Chamber) for a modification to the covenant to permit their accessway pursuant to section 84 of the Law of Property Act 1925 on the basis that the covenant was impeding a reasonable use of the land and it secured no practical benefit or substantial value to their neighbours.

When handing down judgment, Martin Rodger QC appreciated the unusual nature of the situation in that the planned development did not involve a substantial building or part of a building. However, he said that "the purpose of the covenant was to give [the owners of the neighbouring farm] some degree of control over the activities that took place in the fields surrounding their home". He was also mindful that the covenant was imposed in 2003 and the objectors were the original benefactors, it still achieved what it set out to do at its inception and it was beyond dispute that the planned development would interrupt the view. He therefore upheld the covenant and dismissed the application to have it modified.

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