21 September 2020
Red alert - Autumn 2020 – 6 of 6 Insights
The Government has announced that the moratorium on forfeiture of commercial leases for non-payment of rent will be extended from 30 September to 31 December 2020.
The forfeiture moratorium was first enacted in March through the Coronavirus Act 2020. This was expected to amount to a short-term emergency measure and was originally intended to end on 30 June 2020. Having now been extended twice, many within the real estate sector are now wondering when landlord rights will be restored and whether a more targeted/nuanced approach will be adopted in future.
While the extension will undoubtedly provide breathing space for tenants reeling from the effects of the pandemic, there is also a concern that the problem is not going away. Landlords are still entitled to issue debt proceedings for arrears owed to them and in many cases these debts are simply growing by the day. In its announcement, the Government has also made it clear that "where businesses can pay their rent, they should do so" but without legal teeth, landlords will take little comfort from this statement.
The Government has also extended the current revisions to the rules for landlords using Commercial Rents Arrears Recovery (ie appointing bailiffs to seize a tenant's goods) to enforce unpaid rent on commercial leases until 31 December 2020. The remedy remains available for use, but instead of being available after seven days' rent have accrued, 276 days' rent must now be in arrears. For notices of enforcement given after 25 December 2020, this will rise to 366 days' rent.
Looking ahead, a further announcement is expected in the coming days concerning the future of the moratorium for compulsory winding-up orders and the use of statutory demands. This is due to end on 30 September 2020 and so far, there has been no word regarding an extension. However, in view of the approach taken by the Government generally since the start of the pandemic, we do not anticipate that the Government will simply lift the restriction entirely.
For further insight please also read our comprehensive rundown of the impact of coronavirus on the UK real estate sector.
by Multiple authors