The Government’s response to the COVID-19 outbreak, The Coronavirus Act 2020 (“the Act”), received royal assent on 26th March 2020, affording various protections to tenants of both residential and commercial leases.
Specifically, Section 82 relates to commercial tenancies in England and Wales and it is important to call attention to important issues that commercial landlords will need to consider in the coming months.
The protection that the Act provides applies to tenancies considered as “business tenancies” (being those defined in Part II of the Landlord and Tenant Act 1954) for the “Relevant Period”. This period currently runs from 27th March until 30th June 2020. However, it is subject to change if viewed necessary by the Government.
The Act has essentially suspended a landlord’s right of re-entry or forfeiture for non-payment of “rent” during the Relevant Period, even where the reason for non-payment is not COVID-19 related. The Act has defined the term “rent” broadly to include “any sum a tenant is liable to pay under a relevant business tenancy”.
The Act, however, does not grant a rent-free period to the tenant and therefore all rent, service charge and interest incurred on any late payment will still be lawfully due under the terms of the lease. If, after the Relevant Period has concluded, arrears remain unpaid landlords can at that point exercise their right to re-entry. The Act does not afford protection for tenants from possession being sought where other breaches have occurred.
Given the uncertainty, it is advised that landlords carefully consider their position as acquiring a new tenant successfully may prove difficult given the current climate. It is also crucial that landlords correspond directly with their tenants to ensure a solution can be achieved that is suitable for both parties. We strongly recommend that, where possible, any amendments to rent payment or lease provisions be carefully documented in the interest of clarity and protection for both parties.
Should you require any further information regarding landlord and tenant issues, please do not hesitate to contact:
Neil Woolgar, Head of Commercial Property, DDI: 01489 864 133 E: Neil.Woolgar@lawcomm.co.uk or;
Bill Dhariwal, Managing Director, DDI: 01489 864 117, E: Bill.Dhariwal@lawcomm.co.uk.
The above article was written on 31 March 2020 and does not constitute legal advice.