Commercial Landlords and Tenants: Diarise 30 September 2020!03 Dec 2020
Our commercial landlord and tenant clients will be all too aware that as a result of the coronavirus crisis, the Government legislated to protect business tenants by restricting the ability of landlords to forfeit leases of relevant business premises. Legislation was also brought in that restricts landlords from presenting winding up petitions against corporate tenants for any inability to pay their debts.
Section 82 (1) of the Coronavirus Act 2020 prevents landlords from enforcing a right of re-entry or forfeiture for non-payment of rent in respect of business tenancies to which Part II of the Landlord and Tenant Act 1954 applies. It had originally been intended that this protection would remain in place for the period between 26 March 2020 and 30 June 2020 but the introduction of The Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) Regulations 2020 (SI 2020/602) extended that period in England until 30 September 2020.
The Corporate Insolvency and Governance Act 2020 was also brought in by the Government and where commercial landlords might have considered serving statutory demands on corporate tenants for undisputed rent arrears, there seems little point in doing so until after 30 September 2020 because the legislation prevents them from presenting a winding up petition based on any statutory demand served on that corporate tenant between 1 March and 30 September 2020 and from presenting a winding up petition between those dates unless there are reasonable grounds for believing either that COVID-19 has not had a financial effect on that corporate tenant or the debt issues facing that corporate tenant would have arisen in any event.
One would expect it would be hard indeed for any commercial landlord to prove that a corporate tenant has not suffered any financial effects from COVID-19.
The Government has brought in a Code of Practice for the commercial property sector to try to encourage commercial landlords and tenants to work together to protect viable businesses and landlords should be aware that if they enter into a dialogue with their commercial tenants about rent arrangements, Sections 82(2) and (12) of the Coronavirus Act 2020 provide that no conduct by or on behalf of a landlord between the period 26 March 2020 and 30 September 2020 is to be regarded as waiving a right of re-entry or forfeiture for non-payment of rent, unless a landlord gives an express waiver in writing.
Commercial landlords and tenants will therefore want to diarise 30 September 2020 but assuming there will be political pressure brought to bear on the Government by affected parties the closer that date approaches, they should watch out for any extensions beyond that date which may be brought in by the Government in the meantime.
Here are some links to relevant Government publications:
This blog was prepared on 19 August 2020. It is not intended to be advice and should not be relied upon as such.