Government Announces Moratorium On Coronavirus-related Commercial Forfeiture

• Published date: 02 July 2020
• Subject Matter: Real Estate and Construction, Coronavirus (COVID-19), Landlord & Tenant - Leases, Government Measures
• Law Firm: Walker Morris
• Author: Mr Martin McKeague

Along with other unprecedented measures to protect the public and the economy, the UK government announced on 23 March 2020 that commercial landlords are to be precluded from forfeiting commercial leases ¹ and evicting the tenant for non-payment of rent. This measure was originally in place until 30 June 2020 however has been extended until 30 September and will be reviewed thereafter.

These measures form part of the emergency Coronavirus Act 2020. The full Act can be accessed here.

For these purposes the relevant section is Section 82 of the Act. The Act is expressed to apply to a 'relevant business tenancy' and precludes the landlord from effecting a right of re-entry or forfeiture for the non-payment of "rent" for the "relevant period". These terms are defined as follows:

Relevant Business Tenancy

• A tenancy to which Part 2 of the Landlord and Tenant Act 1954 applies, or
• A tenancy to which that Part of that Act would apply if any relevant occupier were the tenant.

Rent

Includes any sum a tenant is liable to pay under any relevant business tenancy.

Relevant Period

"relevant period" means the period- (a) beginning with the day after the day on which this Act is passed, and (b) ending with 30 June 2020 or such later date as may be specified by the relevant national authority in regulations made by statutory instrument (and that power may be exercised on more than one occasion so as to further extend the period);

In the case of an applicable tenancy, the moratorium extends not only to the unpaid principal yearly rent but to any sums payable under the lease. In light of the Government's recent measures, in these circumstances, the landlord would be precluded from effecting re-entry or forfeiture for any sums owed by the tenant until at least 30 September 2020. There had been some suggestion that the moratorium would only apply in circumstances where the tenant could not pay as a result of coronavirus but there is no such qualification - it applies across the board.

The definition of relevant tenancy may give rise to arguments about certain classes of commercial tenancy or occupation not falling within the moratorium. So for example it appears the following are not caught by the moratorium :

• Licences including serviced office accommodation;
• Tenancies at will;
• Mining leases, a tenancy of an agricultural holding, a tenancy granted in consequence of employment, a tenancy not exceeding 6 months and a home business tenancy all of which are specifically excluded...