Landlords Barred From Evicting Commercial Tenants

Many commercial tenants remain worried about how they will meet their next rent payment and many landlords remain worried about their cash-flow, ahead of the next quarter day tomorrow (25th March 2020).

However, new protective measures are being offered to both commercial tenants and landlords regarding rent payments that have been impacted by the coronavirus.

Coronavirus – commercial landlord and tenant rent payments

What protection is offered?

The Government have introduced new measures, which will be included in the emergency Coronavirus Bill currently going through Parliament, which will mean that no business will be forced out of their premises if they miss a rent payment in the next three months.

What does this mean for landlords?

This means that landlords will not be able to exercise any right of forfeiture on tenants that cannot pay rent during this period of time. However, it is expected that this will only delay a landlord’s right to forfeit until after the three month period ends, so commercial tenants will still be liable for the rent after this period.

Before diving into forfeiture options, it is worth picking up the phone to the tenant to discuss the current circumstances as this may help inform your decision making.

The Government has said that they are:

“actively monitoring the impact on commercial landlords’ cash flow and continues to be in dialogue with them.”

What does this mean for tenants?

This will come as some relief to commercial tenants who are struggling to pay rent. However, the Government guidance has indicated that the tenant will still be liable for the rent, so arguably this measure could be seen as delaying the problem and not solving it.

Who does this apply to?

This applies to all commercial tenants. The amendment to the Coronavirus Bill on commercial leases will apply to England, Wales and Northern Ireland.

When will this come into force?

As soon as the Coronavirus Bill receives Royal Assent and is expected to last until 30th June 2020. The Government will then have an option to extend this if deemed necessary.

What should I do?

We await further guidance from the Government as to how this will work in practice.

At Nelsons, we have a mixture of transactional and property dispute solicitors who may be able to assist you in reviewing your leases and contractual arrangements with tenants and give you pragmatic and commercial advice about the options open to you to deal with the developing situation.