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Commercial Tenancies: Protections from Forfeiture Extended - Again

View profile for Jonathan Flynn
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The Government has now announced (on Wednesday 16 June 2021) that it will be taking further action to introduce yet another extension to the protections from forfeiture for non-payment of rent.

The Government’s announcement confirms that the restrictions on rent-related forfeiture of business tenancies will be extended by 9 months, from 30 June 2021 to 25 March 2022. For now, this only affects businesses in England.

The Ministry of Justice has also announced that the restriction on the use of Commercial Rent Arrears Recovery (CRAR) will also be extended by 9 months, to 25 March 2022. However, the number of days’ outstanding rent required for landlords to take this action will remain at 554 days.

The measures are being introduced with a view to enabling the sectors that have been unable to open during the pandemic time to come to an agreement with their landlord without the threat of eviction.

The Government has also announced that it intends to bring in entirely new legislation to deal with the accrued rent arrears of businesses which had to close during the pandemic. The legislation will be geared towards forcing commercial landlords to waive or agree on long-term repayment plans with their tenants for the repayment of rent arrears. There will also be a compulsory arbitration process introduced to resolve those situations where an agreement cannot be reached.

It is worth reiterating that the new measures will only cover those impacted by closures. Therefore, rent debt accumulated before March 2020 and after the date when relevant sector restrictions on trading are lifted should be actionable by landlords as soon as the protections are lifted.

Whilst many commercial businesses may welcome the Government’s announcement, this will no doubt come as a further blow for many landlords hoping to regain possession of their premises where they have tenants who may not have paid rent for many months.

It remains unclear how (if at all) this announcement will impact business tenancies in Wales. No doubt, the situation will become clearer following the introduction of the legislation to implement these additional protections.

We will be continuing to keep the situation under review. Please contact us if you have questions about this update and would like to discuss your options.

JCP Solicitors offices can be found throughout South, East and West Wales, including in Swansea, Cardiff, Carmarthen and Caerphilly.

If you need legal support from our Property Litigation team, contact your local JCP office or complete the enquiry form here.