The Coronavirus Act 2020 - What Commercial Landlords and Tenants Need to Know
- AuthorSarah Davies
The Coronavirus Act 2020 has now come into force, it brings with it emergency measures concerning commercial tenancies. Commercial landlords and tenants will be anxious to know how these measures will impact them and what action they should be taking during these unusual times.
Here are some of the key points that commercial landlords and tenants should be aware of with regard to the new measures introduced by the Act.
There are now new measures which expressly deny commercial landlords the right of re-entry or forfeiture for non-payment of rent in any way. The rent will still be due, but commercial landlords will not be able to end the lease during this period. The Act has therefore temporarily suspended a landlord’s ability to take forfeiture action for non-payment of rent.
The Act covers all business tenancies in England and Wales, and as of 26 March 2020 landlords must now comply with its provisions. These measures will be in place until 30 June 2020, or a later date that may be specified by the Secretary of State or the Welsh Ministers. So, any commercial tenants unable to pay their rent during this period will be temporarily protected from forfeiture proceedings.
Importantly, commercial landlords will also be prevented from evicting tenants until the 30 June 2020, even if forfeiture proceedings for rent arrears have already begun.
Under the new measures, any failure by a commercial tenant to pay rent during the relevant period, currently due to end on 30 June 2020, will not be treated as a persistent delay in the payment of rent – which is often relied upon by commercial landlords as a ground for opposing a new lease. This will no doubt be welcomed by many commercial tenants, but a concern for commercial landlords seeking to secure their property investment.
There is however some good news for landlords. The Act says that no conduct by or on behalf of a landlord during the relevant period, other than giving an express waiver in writing, will waive their right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent. These new measures would not prevent the enforcement of other remedies or a commercial landlord’s right to claim late payment interest under the lease.
Commercial landlords also may still be able to pursue forfeiture proceedings for other breaches of covenant after they have served the relevant notice.
It is worth noting that the provisions introduced by the Act do not appear to give protection to those occupying land or property under the terms of a licence. However, those with licence arrangements should proceed with caution. Courts can find that documents titled ‘licences’ are in fact business tenancies. Each arrangement does, of course, need to be considered on its own facts.
The measures introduced by the Act will no doubt see landlords and tenants with commercial tenancies seeking to try to agree to voluntary arrangements to manage the repayment of rent. JCP’s Property Litigation Team is on hand to help with this, to ensure the rights of both party remain protected.
We will continue to monitor the impact of the Act and the Courts’ response to these new measures.
Sarah Davies, JCP Director and Head of Property Litigation, has developed into one of the most effective specialists in her field of work. Sarah advises on a broad spectrum of property matters, with expertise in property advice and property dispute resolution. Please contact Sarah, for further support on 01792 529 617 or email firstname.lastname@example.org.
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