Legal News | 11.12.20
COVID-19 LEGAL UPDATE: LANDLORD ENFORCEMENT RESTRICTIONS EXTENSION
As you may already be aware, there are currently restrictions in place on the ability of commercial landlords to take enforcement action against tenants on the grounds of non-payment of rent. These restrictions were due to expire on 31 December 2020, but the government announced on 9 December 2020 that these restrictions will now be extended until 31 March 2021.
The government further unveiled an upcoming review of the current commercial landlord and tenant legislation with guidance to support negotiations between landlords and tenants, which will supplement the Code of Practice published in June 2020. More precise details of the legislation in review are expected to be released soon.
Forfeiture of Commercial Leases
The existing moratorium on forfeiture of commercial leases as a result of rent arrears will now be extended until 31 March 2021, instead of the previous expiry date of 31 December 2020. The government indicated that this will be the final extension of the moratorium, so in the absence of any future legislative changes, landlords will again be able to forfeit for non-payment of rent from 1 April 2021.
Until then, forfeiture will remain available as an option for landlords in respect of breaches other than non-payment of rent. This will though, remain subject to the statutory restrictions of service of a notice under section 146 of the Law of Property Act 1925 and giving tenants a reasonable period of time to remedy the breach.
Commercial Rent Arrears Recovery
Alongside the extension of the forfeiture moratorium, the government will also introduce new regulations to further limit landlords’ ability to rely upon the Commercial Rent Arrears Recovery (CRAR) procedure.
In September, the government increased the threshold amount of rent arrears that must be due in order for a landlord to exercise its rights under CRAR to 276 days of principal rent, where the notice of enforcement was given on or before 24 December 2020. This rises to 366 days of principal rent for notices given from 25 December 2020.
The new regulations will further increase the threshold amount of rent arrears required to allow for landlords to utilise the CRAR procedure, although the precise details have not yet been published.
The government also extended the restrictions on landlords’ ability to serve statutory demands on commercial tenants in rent arrears to 31 March 2021. This will mean that landlords faced with non-payment must choose between negotiating concessions with tenants or issuing a court claim for the outstanding sums.
If you would like to discuss your options to recover possession or your rights as a commercial tenant, please get in touch with your usual contact or email: email@example.com or firstname.lastname@example.org.