On 23 March 2020 and in a bid to ease the financial pressure on commercial tenants following the closure of all but essential shops in the UK, the Government placed a moratorium on a landlord’s ability to enforce its right for re-entry or forfeiture under a commercial lease due to non-payment of rent.
The moratorium which forms part of the Coronavirus Bill 2020 commenced on 26 March 2020 and will (at the time of writing) expire on 30 June 2020. This time period has been defined within the Bill as the “relevant period” and in the event that a commercial tenant fails to make payment of rent during the relevant period, “a right of re-entry or forfeiture, under a relevant business tenancy … may not be enforced, by action or otherwise…”.
Whilst a landlord will not lose his/her ability to recover the outstanding rent, such right cannot be enforced until after the end of the relevant period and/or the moratorium has been lifted.
As to re-entry and forfeiture proceedings issued with the court prior to the moratorium, the Bill provides that no order will be made asking a tenant to give vacant possession to a landlord before the end of the relevant period.
Landlords will undoubtedly be feeling the “pinch” and it will undoubtedly be beneficial for a landlord and tenant to have a discussion regarding rent and any difficulties that the tenant envisages making payment. It is important for a tenant to note, that this is not a “rent holiday”, liabilities for rent will still fall due under leases, it is just that no eviction can take place in the relevant period. There is a danger in thinking that rent does not need to be paid, when it may still need to be paid, as the landlord may have their own commitments to their own lenders and are relying on this rent payment. At the end of the relevant period, the tenant may still face a large backdated rent payment, subject to what relief package the landlord recovers from the Government.
If you are a landlord or tenant and require further information or advice on the above, please do not hesitate to contact us on 0808 166 8827.
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