Further Extension to the Moratorium on Forfeiture

As anticipated, the government has announced a further extension to the forfeiture moratorium to 30 June 2021. The result of this extension is that landlords cannot seek to forfeit a lease for non-payment of sums due until 1 July 2021 at the earliest (subject to any further extensions). Similar restrictions on landlords’ rights to exercise CRAR have also been extended.

In light of this further extension, we consider what options are currently available to landlords where they are owed rent arrears or other sums under the lease:

Forfeiture for other breaches:

The moratorium only restricts forfeiture for non-payment of rent and other sums due under the lease. Forfeiture can therefore still be utilised for non-money breaches provided the right to forfeit has not been waived and subject always to tenants’ rights to claim relief from forfeiture.

Debt claims

Landlords are still entitled to issue court proceedings against tenants for outstanding arrears as a debt claim. The risk of proceedings may encourage a reluctant tenant to pay up.

Claims against former tenants and guarantors

Landlords may be able to seek recovery of arrears from former tenants and their guarantors (subject to certain strict timeframes, restrictions and formalities) or existing guarantors who have guaranteed the existing tenant’s obligations.

Rent deposits

Landlords should check whether they hold a rent deposit as they may be able to draw down from the deposit to cover the arrears.

Statutory Demands

Statutory demands can still be served to try to encourage payment of arrears. However, the effectiveness of such a demand is questionable and may not be viable option at present given the current restrictions on winding up petitions. There are no restrictions on serving a statutory demand on an individual or the subsequent presentation of a bankruptcy petition.

If you would like further advice, please contact Meera Patel or Rhiannon Saunders

The information in this article was prepared on 10 March 2021. The law and practice is currently changing frequently, so please check the up to date position before acting on anything you read here.