Coronavirus Act 2020 – Commercial Tenancies

Category: Commercial Property, Dispute Resolution, Property Disputes

As the Coronavirus pandemic continues, many businesses are starting to feel the strain. In particular, commercial tenants may find themselves in a position where they are unable to afford their rent. What is classed as “rent” will be defined within the lease.

Ordinarily, a commercial landlord may exercise its right to enter the premises, change the locks and forfeit the lease if the tenant has failed to pay their rent. The landlord’s right to do so has to be specifically reserved in the lease.  This process is known as forfeiture.

What is included in the Act?

However, the Government has announced that commercial tenants will be protected from eviction for the next 3 months. This means that no commercial tenant can be forced out of their premises for non-payment of rent. The Coronavirus Act 2020 prohibits a landlord from enforcing its right during the relevant period, which is from 26 March 2020 until 30 June 2020. In other words, during this time a commercial landlord cannot exercise its right to forfeit the lease.

In normal circumstances a landlord may waive their right to forfeiture by acting in such a way that is inconsistent with the tenant being late with payment of rent. However, the Coronavirus Act 2020 protects commercial landlords against this. Under the Act, the landlord’s conduct will not amount to a waiver unless there is an express waiver in writing. This will offer some comfort to landlords who want to work with their tenant but do not want to forgo their rights under the lease should payment not be forthcoming later down the line.  

We suggest talking to each other

In these uncertain times, we suggest that commercial tenants who are facing financial difficulties, contacts their landlord to discuss their situation and where possible agree a suitable repayment plan.  Our article on debtors and creditors sets out key considerations for anyone who is facing financial hardship – you can find the article by clicking the link below.

Coronavirus Resource Hub

What else is included?

The Coronavirus Act 2020 also makes changes to existing possession proceedings. Where either the County Court or the High Court makes an order that possession of a property should be granted to the landlord, the date of possession must not be within the relevant period. As such, landlords who have commenced possession proceedings before 26 March 2020 may not obtain possession until at least 1 July 2020.  

If you’re a landlord who has already obtained a possession order that is due to expire before 30 June 2020, the Coronavirus Act 2020 may have extended the date for possession. We encourage all landlords in this position to contact us to discuss this before taking enforcement steps.

We can help you

Forfeiture is a tricky process and can be expensive where a landlord fails to follow the correct procedure. The team at Nash & Co have experience on advising both landlords and commercial tenants on the process and their rights under the lease.

If you are a residential landlord wondering whether the Coronavirus Act 2020 has had an impact on residential tenancies or not, please see our article by clicking the following link.

Commercial Dispute Resolution

What now?

If you have questions or would like some guidance as to what to do next, please get in touch with our Commercial Dispute Resolution team. Please either call Ceren Fox on 01752 827120 or email her at [email protected].