Some asset classes such as logistics and food retail have fared extremely well from rapidly-changing consumer habits. But in the harder hit sectors we saw a number of tenants approaching their landlords for rent concessions when coronavirus triggered a national lockdown. Many have been able to use good commercial relationships to agree one or more of the following:

• a shift from quarterly to monthly rent payment dates / from payments in advance to payments in arrears
• a quarterly rent deferral or suspension
• a temporary reduction in rent
• a form of payment plan to spread payments over a future period.

Extreme care must be taken with the documentation of any concession, to ensure that no arguments arise at a later stage concerning the enforceability of any guarantees or the "contracted out" status of the tenancies (if this applies).

The majority of concessions to date have focused on assisting existing tenants with the pressures of the March quarter date. For the most part landlords are not giving up on the rent entirely, but seeking to help tenants find more realistic payment plans, often as part of negotiated packages that involved quid pro quo re-gears or term extensions.

What if a concession has not been agreed? Most commercial tenants are due to pay the next quarter of their annual rent on 25March . The expectation is that there will continue to be higher levels of non-payment of rent across a number of sectors as tenants feel the full force of the various lockdowns. However landlords' abilities to take enforcement for breach have been progressively tied by statutory intervention.

Back at the start of the first lockdown, Parliament rushed through measures to help protect commercial tenants unable to pay their rent, preventing landlords of business tenancies from exercising their right to forfeit for non-payment of rent (given the widest meaning of any sum a tenant is liable to pay) until 30 June, or from evicting a tenant if forfeiture proceedings have already commenced. The legislation left scope for the 30 June end date to be extended. This moratorium was previously extended to 30 September 2020 , 31 December 2020 and 31 March 2021.  Although we were told that no more extensions were to be expected, it has now been extended once again to 30June 2021.

The forfeiture moratorium has been controversial from the outset, but the latest extension comes as no surprise, as the pandemic continues and the Government has failed to implement any alternative scheme to assist tenants to pay off their arrears over a deferred period. This was always going to leave a "cliff edge" that tenants in difficulty were going to be unable to avoid. With this further extension, it seems that this problem has now been kicked down the road for another day.

However, the Government has reiterated its intention to launch a review of commercial landlord and tenant legislation later this year where it says it will consider a broad range of issues including the Landlord & Tenant Act 1954 Part II, different models of rent payment, and the impact of Coronavirus on the market. 

Further statutory amendments will also be made to the commercial rent arrears recovery (CRAR) procedure (which involves the removal and selling of a tenant's assets) the cumulative effect of which is that CRAR may now only be exercised where there is at least 457 days' of unpaid rent where the notice of enforcement is given between 25 March 2021 and 23 June 2021 and 554 days’ rent where the notice of enforcement is given between 24 June 2021 and 30 June 2021.   Pre-Covid the period was seven days. 

On 26 June 2020 the Corporate Insolvency and Governance Act 2020 ("CIGA") came into force. One of the temporary measures brought in by CIGA prevents the winding up of a company based on deemed insolvency following the failure to comply with a statutory demand. It also prohibits the presentation of a winding up petition unless the creditor can show that it has reasonable grounds for believing that COVID-19 has not had a financial effect on the company or that the company would have been insolvent (cash flow or balance sheet) even if COVID-19 hadn't had a financial effect. The current restrictions were previously extended until 31 December 2020 and the current restrictions are in place until 31 March 2021 although it is envisaged that they will be further extended in line with the forfeiture moratorium as has occurred previously.  

For landlords, serving a statutory demand is therefore (for now at least) less of a threat, and less likely to result in the payment of rent. Whist it is still possible to present winding up petitions (and we are seeing some petitions progress through the courts), both evidentially and procedurally they are much more difficult.  

In the absence of an agreed concession and taking into account the various statutory interventions, what can a landlord do a tenant fails to pay its rent on the March quarter day?

• A landlord can still present a winding up petition against a tenant company on the basis of cash flow or balance sheet insolvency, but would have to show that it had reasonable grounds for believing either that coronavirus has not had a financial effect on the company, or that the company would have been insolvent (either on a cash-flow or balance sheet basis) even if coronavirus had not had a financial effect on the company. Neither route will be straight forward as the landlord may well not have access to up to date financial information on the tenant company. But if a landlord is committed this is an option that can be explored.

• A debt claim for unpaid rent is still available and ought to be simple to run. However it could be difficult to enforce unless the tenant has assets.
• Drawing down on a rent deposit would solve the immediate issue, but it would dilute the investment value of the lease if the deposit wasn't then replenished. That said, failure to replenish may give rise to a right to forfeit in itself, and drawing down on a deposit would solve any immediate cash flow concerns. One point of caution: a top up obligation under a rent deposit deed does not constitute an expense of any subsequent administration in the same way as rent may do, which strategically is something a landlord would take into account where a tenant is potentially on the brink of administration.
• If the landlord is lucky to have a guarantee from a strong covenant, this could be a good option, provided that guarantor isn't facing similar financial problems itself.
• The threat of CRAR could be enough to draw out a settlement offer from a tenant. However, the tenant would need to have between 15 and 18 months of arrears outstanding (depending on when the notice of enforcement is issued) for the landlord to be able to exercise the right, and valuable assets to seize to make this worthwhile.

For some landlords, an overriding consideration will be the reputational implications of being seen to be too aggressive, with Government guidance suggesting that landlords should be compassionate with tenants unable to pay their rent due to the coronavirus, and encouraging them to agree payment plans once the situation improves. However this assumes that landlords are in a financially stronger position than their tenants, which is not always the case. Some landlords might not have any choice but to take action, particularly if they are unable to service interest on their loan agreements. A number of landlords are also frustrated that some tenants in the stronger performing sectors are not paying their rent and that the usual remedies are not available to them to deal with this.

Force majeure provisions tend to feature in serviced office agreements allowing some operators to avoid liability. We have also been advising on whether such agreements have been frustrated in law by the pandemic. However, the position is different with leases.

In the most troubled sectors, we anticipate pressure increasing on landlords and tenants to agree flexibilities in lease term or floor space, and perhaps to incorporate new force majeure mechanisms. Force majeure provisions tend to feature in serviced office agreements, allowing some operators to avoid liability, but not generally in leases. While some parties are already seeking to turn future coronavirus pressures into explicit termination rights, it is far too early to speak of market trends or commonality.

In the absence of force majeure provisions, with rental liability stacking up, some tenants might well argue that their existing leases have been frustrated by coronavirus. Again, this is something we have already been advising on in relation to serviced office agreements. But there has never been a successful application of this doctrine to a lease in England and Wales (despite some high profile attempts, such as the case bought last year by the European Medicines Authority when its Canary Wharf occupation was compromised by Brexit). It is however technically possible, and these, as we are frequently reminded, are unprecedented times.

Another potential option for tenants will be to claim that coronavirus ought to have triggered the rent suspension provisions in their lease and that their landlord should have claimed on their loss of rent insurance policy. Whether or not this is a viable argument will ultimately come down to the specific wording of the lease and the landlord's insurance policy. For many, the argument stretches the construction of a typical rent suspension clause too far, as such clauses are usually stated to be triggered by physical damage or destruction only. But, again, these are wholly unusual times. Others take the view that if a tenant has contributed to the cost of a policy containing a pandemic clause in the loss of rent cover then the tenant should be entitled to benefit from that clause.

One thing is for certain: insurers have so far been highly resistant to coronavirus business interruption claims (and by extension loss of rent claims), although some insurers are now starting to reverse their position. In the public interest and to avoid numerous business interruption policyholders seeking guidance from the courts at considerable expense, the Financial Conduct Authority (FCA) intends to seek a judgment to resolve some of the contractual uncertainty. Taylor Wessing has partnered with trade association UKHospitality in relation to the FCA action. The team's expertise will support UKHospitality as it considers how the FCA court action impacts on the business interruption insurance claims of policy holders in the hospitality sector.

For the time being, we would advise landlords to notify their insurers as soon as possible if they think there is even a remote possibility of one or more of their tenants bringing a claim for (potentially retrospective) rent suspension. Otherwise landlords might find out further down the line that they are out of time to bring a claim on their loss of rent cover, having failed to comply with the notification requirements.

As we saw after the Brexit referendum, the lockdown announced on 23 March will have an impact on valuation.

For example, any rent review effective from the March or June quarter date will be very difficult to assess. What would the hypothetical landlord / tenant be willing to accept / pay for premises which cannot be used due to the lockdown? What additional incentives would be needed? The same difficulty arises with dilapidation claims for leases which expired during lockdown. Such claims are capped by the diminution in value of the premises caused by the disrepairs. But what would the premises be worth in lockdown and has the value been diminished by the disrepairs? Some very difficult questions ahead and litigation is likely.

To end this section on a more positive note, there is a chance for landlords and tenants to co-operate more meaningfully on issues that touch on proactive asset management, as we move from the understandable situation whereby concessions were made to address immediate and uncertain rental pressures in March.

For example, in the short-term, we have been advising a number of our clients on licences which enable tenants in the food & beverages sector to operate outdoor "pop-up" concessions until such time as they can trade from indoors again.

In the longer term, and in the context of a general (pre-coronavirus) direction of travel, many landlords were already thinking strategically about their future in the provision of services alongside bricks and mortar. They were considering the monetisation opportunities available from installing tech on curated estates or understanding the need to capture sustainability data for investment benchmarking. Targeted portfolio reviews might meanwhile highlight vulnerabilities relating to the new building safety regulatory regime or the shifting minimum energy efficiency standards. All of this gives landlords the opportunity to think creatively; to leverage the offer of new rental incentive packages and make amendments that help them become a new kind of landlord for the brave new (post-coronavirus) world.

While Government guidance for some sectors has been very clear (for example the comprehensive closure of the hospitality industry), for other sectors there have been shades of grey, and this is true in particular for the construction industry.

When lockdown was first announced, a number of contractors and employers were uncertain as to what this meant for them and whether they could (and should) continue operating on site. Some contractors almost immediately downed tools across all of their sites while they tried to work this out. Others remained on site and endeavoured to operate social distancing as best they could, but in some cases were the target of critical social or mainstream media stories for jeopardising the safety of workers.

And while the nature and scale of the impact on construction projects still cannot be predicted with any accuracy, it is inevitable that most construction projects have been and will continue to be subject to at least a degree of disruption, due to ongoing labour and supply chain issues.

Whether the contractor or the employer bears the risk for the costs ensuing from the pandemic will ultimately come down to the terms of the contract. Almost all UK construction contracts will contain extension of time and loss and expense clauses, but will lack specific terms allocating the risk of infectious disease outbreaks. Parties will therefore need to rely on provisions such as force majeure to determine who bears the risk.

With the support of the Government, the Construction Leadership Council (CLC) has subsequently provided practical guidance to the construction industry, including its Contractual Best Practice Guidance (CLC Guidance), which offers useful advice for both employers and contractors on measures to be taken to avert economic hardship and to recognise the unique circumstances we all face. Contractors and employers are asked to engage in collaborative discussions regarding payment and revision of contractual clauses. The intention is to encourage parties to mitigate the effects of the pandemic and constructively resolve contractual disputes.

The Government clearly wants to ensure that as and when the lockdown is eased there remains a ready supply chain to help get the economy back on track. Whether this happens will depend on attitudes of both employers and contractors to resolving issues. But the message from Government is clear, we all need to act fairly and responsibly when performing and enforcing contracts, so as to achieve just and equitable contract outcomes, protect jobs and help the economy recover.

The Government has also announced planning measures that are designed to support developers during this period:

• Temporary statutory amendments will enable charging authorities to defer Community Infrastructure Levy (CIL) payments, to dis-apply late payment interest on a temporary basis and to return interest already charged at their discretion. However, disappointingly for larger developers, the amendments to the CIL regime will only benefit small and medium sized developers with a turnover of less than £45m.
• The guidance from the Government also encourages charging authorities to apply existing flexibilities within the CIL regime, for example to introduce instalment policies and waive surcharges, to ease the burden for developers.
• Likewise, planning authorities are to consider deferring the delivery of s106 obligations through deeds of variation and to take a pragmatic and proportionate approach to the enforcement of s106 obligations. This should create an opportunity for developers to defer obligations and payments that would otherwise need to be satisfied prior to commencement of development until a later date.

We anticipate that there will be more of this to follow, as the Government looks to get us all back to business as close possible to normal, and as soon as possible. Further measures could include a relaxation of the permitted development rights regime in order to facilitate the short-term repurposing of space without the need to go through a time-consuming planning process.

And, finally, despite the significant disruption that we've all recently been facing, the Government published in May its long-awaited proposals to reform the regulatory regime where building safety is concerned. There is no indication when a draft bill will be available but you can read a summary here.

With many businesses planning for a return to the 'normal' workplace (if not already back), there is scope for a wide variety of disputes to arise on whether it is actually safe to do so. Current guidance is to keep working from home where this is possible.

Where a return to work is planned, and where homeworking continues, employers need to carry out a specific Covid risk assessment to help them match health and safety measures to the current issues. Staff will need to be consulted on that.

Employees have the right to refuse to return to their workplace in circumstances of danger, which the employee reasonably believes to be serious and imminent, and which the employee could not reasonably be expected to avert. That can include danger to others - and may be even vulnerable family members who are being shielded. Compensation for any business dismissing an employee in these circumstances would be unlimited. There is little doubt that the pandemic is a circumstance of danger. The key question will be whether an employee's fear of imminent danger is reasonable in the circumstances at their specific place of work. For the employer, following government guidance will be the start, but not the end, of the story. It is an employee's individual circumstances that will ultimately determine whether they have a reasonable belief that working is not safe.

For other employers, the priority will remain how long they can retain employees while there is little or no work available. The phasing out of the Government's Coronavirus Job Retention Scheme to the end of October is less abrupt than some had feared. The hope must be that activity in most sectors will have increased sufficiently by then to avoid large-scale redundancies when the Scheme comes to an end. There is a question mark as to how some employers in the hard-hit hospitality industry will be able to start contributing to costs from the end of August when their business has not made any money for almost half a year. And since employees need to start consulting staff up to 45 days before termination where large-scale redundancies are proposed, they will need in practice to make a plan by August at the latest.