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New law: COVID-related legal protections for commercial tenants extended to end of 2020

Tenants of commercial property in England will welcome new laws that extend the period during which they are protected from certain legal actions by their landlords.

October 2020

This update was published in Legal Alert - October 2020

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

The new rules mean commercial landlords cannot:

  • forfeit a business tenancy for non-payment of rent, if the non-payment is due to COVID-19; or
  • bring Commercial Rent Arrears Recovery (CRAR) proceedings against a business tenant who is in arrears

until 31 December 2020. The protections were previously due to expire on 30 September 2020. As before, rent, service charges and insurance (and interest, where the lease provides for it) will continue to accrue during the moratorium.

The CRAR changes mean that a landlord whose tenants are not paying rent will be claiming for a minimum of 276 days’ arrears where their notice of enforcement is given on or before 24th December 2020, and for at least 366 days where the notice of enforcement is given on or after 25th December 2020.

At the time of writing the government has not yet extended the restrictions on starting winding-up proceedings against tenants in arrears, which are due to expire on 30 September, but is said to be considering doing so.

However, there may be steps that landlords can take – such as forfeiting for other breaches than non-payment of rent, using rent deposits, seeking rent from guarantors or simply going to court to recover rent. Landlords should consider taking professional advice on the costs and implications of each.

Note generally that tenants and landlords are supposed to negotiate with each other in good faith about their relationship, under a special government Code of Practice, during the COVID-19 pandemic. Tenants who can afford to pay their rent should not use the pandemic as an excuse not to do so.

Operative date

  • Now

Recommendation

  • Commercial tenants and landlords should consider whether to take specialist advice as result of the new extensions.

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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