COVID-19: Commercial landlords and tenants

We recently produced a blog on the disputes that could potentially arise between landlords and tenants unable to pay their rent during the coronavirus outbreak. But what of commercial tenants? With businesses across the UK suffering a heavy blow to their finances, particularly those in the leisure, retail and hospitality sectors, many will be concerned that they will be unable to pay the rent on their premises – and face forfeiture as a result.

However, it will come as a relief to thousands of businesses that emergency measures promised by the government to protect commercial tenants have now become law, under the Coronavirus Act 2020.

 

Financial support for commercial tenants

Section 82 of the Coronavirus Act 2020 places temporary restrictions on the forfeiture of commercial premises. For at least three months (26 March to at least 30 June 2020), commercial landlords cannot enforce any rights of forfeiture for tenants who fail to pay their rent. Accordingly, a right of re-entry or forfeiture for non-payment of rent cannot be pursued before the end of the “relevant period”, i.e. from the date after the passing of the Act until 30 June 2020 (although this date may be extended depending on the circumstances).

It should be noted that at the end of the “relevant period”, the landlord will once again be permitted to forfeit if the tenant continues to fail to make their rent payments.

Failure to pay rent constitutes a breach of the tenant’s obligations, but many commercial landlords will be aware that they will waive their right to forfeit if they treat a lease as ongoing after it has been breached. It will therefore be of comfort to landlords that the Act makes provision for conduct by landlords and waiver of forfeiture during the “relevant period”.

 

Communication is essential

The above paragraph makes a very important point – commercial tenants will still be liable for their rent after the emergency measures come to an end. This is why it’s extremely important for landlords and tenants to start talking as soon as possible to come to an arrangement for how rent arrears will be repaid in the coming months.

 

Disputes may still arise

It is inevitable that widespread non-payment of rent will lead to a certain number of disputes between landlords and tenants. In cases where the two parties are unable to come to an agreement, the services of a professional Dispute Resolution solicitor may be necessary.

While our Dispute Resolution solicitors always strive to come to an agreement out of court, avoiding this expensive and lengthy process at a time when businesses are already financially vulnerable, they also have a wealth of experience in guiding clients through court proceedings.

 

Here to support you

Businesses across the UK are facing challenging times, while commercial landlords also face cashflow problems resulting from coronavirus-related rent arrears. Here at Attwaters Jameson Hill, we understand that both tenants and landlords are struggling financially through no fault of their own; our approachable, sensitive lawyers will therefore work closely with both parties to come to the best resolution for all concerned. Contact Dispute Resolution Solicitor, Prabhi Ghura, for expert advice in this area at prabhi.ghura@attwaters.co.uk or call her on 0203 871 0017.