Government Extends Commercial Lease Enforcement Restrictions

• Published date: 16 October 2020
• Subject Matter: Real Estate and Construction, Landlord & Tenant - Leases
• Law Firm: Butcher & Barlow
• Author: Mr James Holton

The Government has announced an extension of the existing restrictions on commercial landlords' ability to commence enforcement of breaches of leases including forfeiture. This forms part of a wider package of measures with the aim of supporting businesses during the on-going Coronavirus pandemic. Commercial landlords and their agents will however be looking for more creative ways of realising the value of investments.

James Holton, Property Dispute solicitor specialising in Landlord and Tenant matters who is based at our Gadbrook Park office, considers the options available to Landlords.

Forfeiture

The Government has extended the current moratorium which prevents landlords from forfeiting leases on the ground of non-payment of rent until at least 31 December 2021. This includes both changing locks and the progression of Court proceedings which will be stayed once issued.

Forfeiture remains an option for other breaches of lease covenants excluding payment of rent such as for breaches of use or breach of repairing obligations but the service of a Section 146 Notice will still be required.

Commercial Rent Arrears Recovery

The Government has also extended the current restriction on the exercise of Commercial Rent Arrears Recovery ("CRAR"). The CRAR procedure allows a landlord to instruct bailiffs to take control of a tenant's goods and sell them in order to recover an amount equivalent to the rent arrears.

During the existing restrictions, CRAR can only be used where the landlord is owed at least 189 days of rent.

These provisions are being extended so that 276 days of rent (effectively three quarters) will need to be outstanding where notice of enforcement is given on or before 24 December 2020. This rises to 366 days of rent (effectively four quarters) for any notice served subsequently.

Code of Practice

The Government has emphasised the recent Code of Practice and is encouraging parties to follow the same as a form of alternative dispute resolution in order to minimise the risk of disputes escalating between parties. The Code encourages early co-operation and negotiations between the parties.

Commercial Considerations

The Government is continuing to offer protection for commercial tenants where possible...