Business Tenancies Update- COVID-19 measures changing from 1^st October 2020

The COVID-19 emergency protections that have benefitted business tenants since March will come to an end on 1^st October 2020.  Tenants will then again become vulnerable to forfeiture, Commercial Rent Arrears Recovery and statutory demands.

The ‘Code of Practice for commercial property relationships during the COVID-19 pandemic’, which the government published on 19^th June 2020, applies until 24 June 2021 and provides parties with the tools to reach a mutually beneficial agreement.  Adoption of the Code is entirely voluntary however, meaning that landlords and tenants should prepare for the expiry of the protections.

Tenants need to be aware that the protections only restrict a landlord’s remedies against tenants who have been unable to pay rent, and that they do not create a rent-free period.  As of 1^st October 2020, if tenants are still unable to pay the outstanding rent, they should seek to enter into an agreement with their landlord to waive or defer the outstanding rent.  Tenants will also need to consider September quarter’s rent as this is due shortly before the protections expire.

Landlords will also need to be cautious.  Section 82 of the Coronavirus Act, which protects business tenants from forfeiture, provides that landlords do not waive the right to forfeit the lease by treating the lease as continuing during the ‘relevant period’, being the period between 25^th March 2020 when the Act was passed and 30^th September 2020.  This means that acceptance of any rental payments during this time cannot amount to a waiver of the right to forfeiture. Landlords will however need to take action once the relevant period expires on 30^th September or else they risk waiving the right to forfeit.  Accepting September quarter’s rent on 29^th September would be a safer option than accepting it on or after 1^st October 2020, which is likely to be sufficient to waive the right to forfeit the lease for non-payment of the March and/or June quarters’ rent.

The contents and dates contained within this article are correct at the time of writing, however, this area of law is under constant review and subject to change.

If you are a landlord or tenant and need advice on what these changes mean for you, please contact Louise Palmer, Solicitor in our Dispute Resolution team, on 01543 267231 or by email at lpalmer@ansons.law.

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