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How has the coronavirus affected commercial landlords and tenants?

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What the Act says

The Coronavirus Act 2020 has curtailed a commercial landlord’s ability to regain possession of the property on the basis of unpaid rent, as the Government attempts to protect business tenants from the effects on the economy from this crisis.

Section 82 of the Act directs that:-

A right of re-entry or forfeiture for non-payment of rent may not be enforced as of today until at least 30th June 2020.
In respect of any cases currently before the Court enforce a right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent, the Court must ensure that the tenant does not have to give possession of the property to the landlord before at least 30th June 2020.
For the purposes a section 25 notice served by a landlord to determine a commercial lease for persistent delay in paying rent which has become due, any failure to pay rent under that tenancy from today until at least 30th June 2020 is to be disregarded.

What commercial landlords can do

However, should a tenant fail to make payment of its rent during this period then a commercial landlord still does have options available to deal with matters, including that the landlord could:-

draw down on the rent deposit;
pursue the guarantor or the former tenant;
issue Court proceedings to recover debt;
instigate Commercial rent arrears recovery (CRAR) – a method of enforcement for recovering rent arrears relating to commercial property;
commence insolvency proceedings – where there is no dispute as to the amount of the debt, the landlord can serve a statutory demand on the tenant. If this remains unpaid after 21 days, and it is £5,000 or more in relation to a tenant who is a sole trader or partner in a firm (more than £750 for Company tenants), then this may be deemed evidence of inability to pay a debt and therefore gives grounds to present a bankruptcy or winding up petition; or
enter into a payment agreement with the tenant requiring the tenant to pay the arrears in specified instalments.

If you’re unsure what to do, contact us

With the situation changing constantly, many landlords are in need of sound legal advice in tenant-related matters. Our experienced Litigation department have a vast amount of experience working with landlords. If you need advice on the new measures, our experienced solicitors are on hand to help.