COVID Regulations to be Extended for Commercial Leases
Under the most recent COVID regulations, the prohibition on a landlord forfeiting a lease for non-payment of rent was due to expire on 30 June 2021. Similarly, the bar on service of statutory demands and winding up petitions on companies was also due to expire on 30 June. The current COVID rules in respect of commercial rent arrears recovery were also due to expire on the same date.
The Government has now announced its future plans for all of the above:
In respect of forfeiture of rent, the current protection afforded to commercial tenants is going to be extended until 25 March 2022. During this period the landlord may not forfeit for non-payment of rent. That said there shall be no waiving of a right of re-entry or forfeiture, unless the landlord gives an express waiver in writing. Primary legislation is to be introduced to ringfence built up rent arrears and the landlord and tenant will be required to come to agreement as to how rent arrears are to be dealt with. If they can not reach agreement, then they will have to submit to binding arbitration in respect of the rent arrears dispute. It is not certain how such a binding outcome will affect the preserved right of the landlord to forfeit or re-enter.
Up until 30 June 2021, 554 days of unpaid rent must have accrued in order for the landlord to take possession of the tenant’s personal property, with a view to satisfying the rent arrears. It now looks as though these protective provisions will be extended until 25 March 2022.
Currently statutory demands and winding up petitions may not be served on companies in respect of “COVID” debt. It is expected that this will now be extended until 30 September 2021.
Whilst these developments will be welcomed by commercial tenants, landlords will no doubt be frustrated and foresee another difficult year ahead. Although it is clear that it is in the interests of the economy to give as many commercial entities as possible the opportunity to rebuild, the question has to be asked: will the above extensions make any difference or are they simply prolonging the agony for landlords and delaying the inevitable forfeiture/court action?
Should you have any questions in respect of the above or require more information about commercial property disputes, then please contact James Thornton from our Litigation and Dispute Resolution Team.
James Thornton – Head of Litigation and Dispute Resolution
Email: jthornton@fionabruce.co.uk
Tel: 01925 217026
The contents of this article do not constitute legal advice and are provided for general information purposes only.