The Coronavirus Act 2020 (“the Act”) has now been passed and become law. This legislation gives emergency powers to police, councils, courts, ministers, coroners etc to assist in dealing with the issues associated with the UK being on lockdown. A link to the full Act can be found here.
Within the Act, protection for certain business tenants from forfeiture of their commercial leases has been included. The salient points are detailed below:-
- The below provisions has now been extended until 30 September 2020. By s.82 Coronavirus Act 2020 landlords are prevented from forfeiting business tenancies for non-payment of rent during the relevant period. S.82(12) defines the relevant period as that commencing on 26th March 2020 and expiring 30th June 2020, or such later date as may be specified by regulation. The Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) Regulations 2020, which come into force on 29th June 2020, extend the relevant period from 30th June 2020 to 30th September 2020.
- The provisions apply to certain business tenants of premises in England and Wales.
- The restriction applies to all business leases as defined within Part II Landlord and Tenant Act 1954 (“54 Act”) – i.e. whether they have security under the 54 Act or not. It will also apply to tenancies where the 54 Act would apply, if the occupier were the tenant (for example, if the tenant has sublet and is no longer in occupation).
- In respect of those leases, a right of re-entry or forfeiture cannot be exercised by a landlord during this period, where the landlord seeks to exercise that right as a result of arrears of rent.
- The right as regards other breaches of the lease is not affected.
- It is normally a concern for landlords that by not taking steps to quickly enforce a right of entry or forfeiture, the right may be lost. The legislation addresses this by making it clear that the right to forfeit the lease is not lost during this period, save by express waiver in writing by the landlord.
- There are provisions which relate to existing forfeiture proceedings in the High Court and County Court, which effectively prevent the Court from requiring the business tenant from vacating prior to the expiry of this restriction.
- It is possible for landlords to object to granting a new lease to these types of business tenant at the expiry of the contractual term, on the basis that the tenant has persistently delayed in paying rent. Any failure to pay rent during this period is to be disregarded for the purposes of any future renewal proceedings.
If you are a landlord or tenant of commercial premises who needs advice on their position, please contact Lee Pearce, Joe Brightman or Molly Frankham.