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Coronavirus (COVID-19): Commercial Leases Moratorium

Coronavirus (COVID-19): Commercial Leases Moratorium

06/04/2020

The government has passed temporary legislation in light of the national Coronavirus outbreak. The Coronavirus Act 2020 (the ‘Act’) includes a moratorium to protect tenants of business tenancies from eviction for non-payment of rent.

The Moratorium

Section 82 of the Act contains a three-month moratorium on Landlords ability to forfeit commercial leases for non-payment of rent. The prohibition will remain in place until 30 June 2020 but can be extended if necessary. The moratorium applies to any lease which falls under the definition of a business lease within the Landlord and Tenant Act 1954.

The moratorium on rent arrears applies not only to rent itself. Under the Act, rent is widely defined and includes any sum a tenant is liable to pay under a business tenancy, so, therefore, will include service charges, insurance rent and any other payments due as described in the lease.

Limitation of the Moratorium

The Act does not suspend the tenant’s obligation to pay rent, it merely prevents the landlord from forfeiting during the Coronavirus national emergency. Once the moratorium is over, landlords will be free to forfeit leases for all accrued unpaid rent, including interest.

The moratorium only applies to rent arrears (as widely defined), so where the tenant is in breach of other covenants, the landlord can take the usual steps to give notice to the tenant and potentially forfeit the lease.

Other Steps to Recover Arrears

The Coronavirus Act does not prevent a landlord from taking other steps to recover unpaid sums under the lease. Landlords can still consider recovering sums due to them by drawing on rent deposits or exercising Commercial Rent Arrears Recovery, by serving Statutory Demands or by issuing a money claim.

Suspension of Court Proceedings

The Act provides that orders for possession in existing court proceedings must not require tenants to give possession before 30 June 2020.

Summary

Landlords are prevented from forfeiting commercial leases for unpaid rent until 30 June 2020. Landlords can consider taking other steps to recover sums due to them, however, landlords cannot commence forfeiture proceedings until the end of June.

If you need advice on any property law matter during the Coronavirus outbreak, please contact Robert Twining on 01732 770660, email [email protected] or via our contact page. Warners Solicitors has offices in Sevenoaks and Tonbridge, Kent.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published

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