The Government has announced that it will be extending a moratorium, protecting commercial tenants from the imminent threat of:
- Forfeiture for non-payment of rent; and
- Commercial Rent Arrears Recovery
The moratorium will now be effective until 25 March 2022.
The initial ban on forfeiture for non-payment of rent was introduced by the Coronavirus Act 2020 in March 2020 and was anticipated to only apply for three months. Since then, the Government has repeatedly extended the moratorium to assist commercial tenants (most recently until 30 June 2021). This significant extension was unexpected and shall afford commercial tenants protection from eviction (in respect of arrears) for (at least) two years since the protection was first enacted.
The news will, of course, be warmly received by those tenants who have struggled during the pandemic. However, landlords have genuine cause for concern – particularly those with tenants that i) can afford to pay rent; and/or ii) are not adversely affected by COVID-19 and have simply chosen not to pay.
Furthermore, the Government has stated that legislation will be introduced to ringfence outstanding unpaid rent accumulated whilst tenant premises were closed during the pandemic. Landlords will be expected to make allowances for these arrears and share the financial burden with their tenants. The legislation will purportedly help the parties work together to reach an agreement and in some cases will provide for a binding arbitration process to facilitate this. The details will be published in due course.
In addition to the forfeiture moratorium, there have been announcements extending protection to companies in other areas such as restricting statutory demands and winding up petitions for a further three months.
Whilst the Government suggests that commercial tenants that can afford to pay rent should do so, the practical reality is that all commercial tenants (regardless of their financial means) will now be afforded eviction protection until at least 25 March 2022.
Are any enforcement options available to commercial landlords?
Notwithstanding the above developments, there are alternative options available to commercial landlords should they wish to pursue a claim against their tenant for commercial rent arrears.
If you are a commercial landlord or tenant and require advice on property-related issues, or any other type of dispute, whether out of the present Coronavirus or otherwise, then please contact Daniel Blake, a Senior Associate in our Litigation and Dispute Resolution team.
Please note – this article does not constitute legal advice.