COVID-19 Legal Update: Commercial Lettings

The new Coronavirus Act 2020 introduced a three month moratorium as of 26 March 2020 up to 30 June 2020 preventing landlords from exercising their right to forfeit either by proceedings or peaceable re-entry for non-payment of rent. This period may be extended.

Key features are:-

The Coronavirus Act applies to "relevant business tenancies" which are leases protected under the Landlord and Tenant Act 1954 (whether or not contracted-out) or would be protected if the lawful occupier was the tenant (e.g. sub-tenants). It does not apply to tenancies at will, licences or any other arrangement which does not grant exclusive possession.
‘Rent’ includes all sums due under the lease such as service charge and insurance premiums.
The Act does not entitle tenants to withhold payment of rent but if rent is not paid, the landlord cannot forfeit the lease. Interest continues to accrue in accordance with the lease.
Unless expressly waived in writing, the landlord’s right to forfeit is preserved during the moratorium period.
If forfeiture proceedings have already been commenced, the Court cannot grant the landlord possession before 30 June 2020.

It appears for now that landlords retain the right to pursue guarantors and to use other methods of enforcement. The right to forfeit for non-money related breaches also appears to be preserved. However, landlords should consider carefully whether it is commercially expedient to forfeit at the current time and should seek specialist advice before doing so. Many landlords are agreeing rent deferrals, monthly payments or payments in arrears. Some are choosing to draw down on rent deposit monies.

Please contact Meera Patel or Martin Otvos for further information.

The information in this article was prepared on 3 April 2020. The law and practice is currently changing daily, so please check the up to date position before acting on anything you read here.