Legal News | 19.03.21

Landlord Remedies and Recovery of Possession for Business Tenancies

There are various procedures and remedies in place that allow a Landlord to recover rent arrears or possession of their property. However, due to the Coronavirus pandemic, some of these procedures have been altered and it is important that the Landlord understands the timescales involved.

In the most recent Government update, published on 10 March 2021, the moratorium period for some of the remedies for commercial landlords was extended from 31 March 2021 to 30 June 2021.

Please find the full Government announcement here:
https://www.gov.uk/government/news/further-support-for-commercial-and-residential-tenants?utm_medium=email&utm_campaign=govuk-notifications&utm_source=36cd14b4-4369-4ede-b7d4-b1afb862673f&utm_content=immediately.

There are numerous remedies available to the Landlord to allow them to recover rent arrears or possession of the property:

– Non-legal methods: these include writing letters to the Tenant, before taking further action and demanding payment of rent.

– Claim as a debt: there are currently no restrictions on Landlords, in respect of Coronavirus, issuing claims as debt under Part 7 or Part 8 of the Civil Procedure Rules in order to recover rent arrears from tenants.

– Commercial Rent Arrears Recover (CRAR): This is a statutory procedure which allows landlords of commercial premises to recover rent arrears by taking control of the tenant’s goods and selling them.

Ordinarily, at least 90 days’ worth of rent is needed to be outstanding, however, due to the implementation of the Coronavirus Act 2020, there now needs to be at least 366 days’ worth of rent outstanding by the Tenant. This rule currently applies until the 30 June 2021.

– Forfeiture: The Coronavirus Act 2020 has imposed restrictions on forfeiture of most business tenancies. These restrictions have been put in place until at least 30 June 2021.

– Statutory Demands and Winding Up: The Corporate Insolvency and Governance Act 2020 prohibits the presentation of a winding-up petition based on an unsatisfied statutory demand, which has been served between 1 March 2020 and 30 June 2021. The only circumstance whereby this will be allowed is if it can be proven that Coronavirus did not worsen the financial position of the Tenant.

– Guarantors: a Landlord may be able to recover rent arrears, and other sums that are due under the Lease, from previous tenants or their guarantors.

In order to pursue a former tenant or guarantor, the Landlord will need to serve a Section 17 Notice in a prescribed form, within 6 months of the charge falling due. This process remains the same in light of Coronavirus and there have been no restrictions imposed.

– Evictions: the commercial eviction ban has been extended to 30 June 2021, to provide further support to businesses as they begin to re-open.

With regards to other breaches:

– ‘Step In’ rights: most leases will contain a clause, which provides the Landlord with the right to serve a notice on their Tenant, specifying any breaches that have occurred in relation to the condition of the property. If the Tenant then fails to remedy those breaches, the Landlord has the right to enter the property to carry out the works and recover the costs for doing so from the Tenant as a debt. There are currently no restrictions in exercising these clauses. Legal advice is recommended before exercise of this right as specific lease requirements must be observed first.

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, via our contact form https://wansbroughs.com/contact/ or email josh.taylor@wansbroughs.com.