The Government has confirmed that it will be renewing the measures it introduced to protect tenants in the commercial property sector unable to pay their rent due to the COVID-19 pandemic. Currently, commercial tenants benefit from a prohibition on landlords forfeiting commercial leases for non-payment of rent. This measure was due to end on 31 December 2020, however the Government has announced that the restriction on forfeiture will be extended until 31 March 2021.
For commercial landlords, although this renewal of protection for tenants was widely expected, it will be of significant consolation that the Government has confirmed that this will be the final extension to protections from the threat of eviction, to give tenants a final three months to come to an agreement with landlords on unpaid rent. Although a large number of landlords and tenants will have engaged proactively to seek a joint approach to navigate the effects of the pandemic, a number of landlords have had to contend with tenants simply refusing to pay rent even though they can and should be paying, or using the measures as an opportunity to seek to restructure their lease obligations. This announcement makes it clear that it is the end of the road for those who can pay rent but have refused to do so, and that those tenants must pay their rent. The Government will be publishing further guidance shortly to support negotiations between landlords and tenants to agree rent payment options. This will sit alongside the Government's Code of Practice published in June.
The Government will also be extending the measures introduced by the Corporate Insolvency and Governance Act 2020 restricting the use of statutory demands and winding-up petitions and the restrictions on landlords using Commercial Rent Arrears Recovery (CRAR) to recover unpaid rent, both of which were due to expire on 31 December 2020, but have now been extended until 31 March 2021 as well.
Interestingly, the Government has also announced a review of landlord and tenant legislation relating to the commercial property sector early next year. The review will consider a broad range of matters including Part II of the Landlord and Tenant Act 1954, different models of rent payment and an analysis of the impact of coronavirus on the market. Further updates on the scope and detail of the review will follow when the review is published.
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2020. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.
