We are getting numerous enquiries from both landlords and tenants in relation to their position for non-payment of rent for commercial leases during this Covid-19 pandemic.
As of 25 March 2020, the Coronavirus Act 2020 (“the Act”) was enacted. In accordance with Section 82 of the Act, all forfeiture of leases for non-payment of rent have been prohibited from 25 March 2020 to 30 June 2020 inclusive. In addition, all on-going forfeiture proceedings in Court will fall under this Act and will therefore be adjourned. The Government have the ability to extend this period of time subject to the on-going pandemic.
Interestingly, this legislation only applies for non-payment of rent and does not provide the tenant with protection from forfeiture for other breaches of covenants contained within the lease.
Furthermore, whilst the landlord cannot forfeit the lease for non-payment of rent, the landlord will still have the ordinary recourse for the recoverability of the rent, for instance, issuing a money claim for unpaid rent, serving a statutory demand, CRAR etc. It should be noted any Court proceedings will most likely be delayed as a result of Covid-19, whereas insolvency proceedings have been adjourned for a period of 3 months.
During this period the landlord will be unable to waive the right to forfeit the lease unless the landlord expressly does so in writing. This will allow the landlord the option of forfeiting the lease once this Act is no longer in force.
Finally, this Act will only apply to leases which fall under Part 2 of the Landlord and Tenant Act 1954, consequently Tenancies at Will, leases under the period of 6 months and any other agreements which are not protected by the 1954 Act, will not be protected by this Act.