On 9 December 2020 the UK Government announced a further extension to the moratorium on forfeiture of leases on the grounds of non-payment of rent or other sums due, and the presentation of winding-up petitions.
The extension is until 31 March 2021
Whilst the Government has said this is a “final extension”, given this Government’s tendency to perform U-turns I wouldn’t count on it.
As most of you are probably aware, there are already restrictions on Commercial Rent Arrears Recovery until the same date, which limits the recovery action that can be taken.
So can commercial landlords do anything to recover outstanding rent?
There are genuine cases of many commercial tenants having effectively lost any income stream at all as a result of the global pandemic, and commercial landlords should exercise caution before taking any legal action in respect of those tenants.
There are, however, also many commercial tenants who are taking advantage of the Covid imposed limitations – the ‘can pay but choose not to pay’ tenants.
There is no embargo on debt proceedings being issued against a defaulting tenant and a money judgment being obtained for the rent arrears. The realisation that a CCJ entered against a tenant, which may potentially impact upon their credit rating, may bring about a reality check that there is only so long that they can avoid paying the outstanding rent and/or refuse to engage with the landlord. I see no reason why, in such cases, a commercial landlord should not take such action – at the very least it may bring the tenant to the table to enter into a dialogue with the landlord.
Landlords should also bear in mind their right to recover rent from former tenants and their guarantors by serving s.17 notices – remember that these must be served within 6 months of the arrears falling due.
The Government also announced that it would be carrying out “a review of the outdated commercial landlord and tenant legislation, to address concerns that the current framework does not reflect the current economic conditions”. On that one, watch this space.
If you are a commercial landlord and would like to discuss anything within this article, please contact Marcella Cox on 020 8427 9080 or by email on [email protected]