Protective Measures For Commercial Tenants Impacted By COVID-19 Extended Again

On Wednesday (9^th December), the Government confirmed that they have extended the protective measures for commercial tenants who have been impacted by COVID-19 to the end of March 2021.

Initially introduced by the Government via the Coronavirus Act 2020 on 25^th March this year, this is the third time that the protective measures have been extended and will mean that:

• Business tenants will be protected from forfeiture for the non-payment of rent as a result of COVID-19. Consequently, landlords cannot forfeit a business tenant’s lease (by either peaceful re-entry or by formal Court proceedings) until at least 31^st March 2021.
• The current restrictions on statutory demands and winding up petitions, along with Commercial Rent Arrears Recovery (CRAR), will also be extended until the end of March.

However, the Government has once again stated that where tenants are able to pay any or all of their rent, they should do so.

The extended protections for commercial tenants from forfeiture for non-payment of rent are stated (in England) via the Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) (No 3) Regulations 2020 (SI 2020/1472), which come into effect on 30^th December 2020.

Constructive communication between landlords and tenants

The overall aim of the provisions is to give landlords and tenants the breathing space they need to negotiate a repayment plan on rent debt (owed as a result of the coronavirus) and payments going forwards.

It is likely that commercial landlords and tenants will already have had difficult conversations about how to navigate through this crisis together. Ultimately, despite the measures, tenants will still liable to pay rent to the landlord and the usual remedies will be available to the landlord once the effect of the pandemic eases and the world reverts to some form of normality.

It may therefore be that constructive communications between landlords and tenants now and agreeing, say, a temporary rent reduction and/or a payment plan to pay down the arrears over time may help cash flow and “steady the ship” in the short-term.

Further guidance to assist with negotiations between landlords and tenants will be released soon which will supplement the voluntary Code of Practice published by the Government in June.

The Government has also confirmed that there will be a review of commercial landlord and tenant legislation early next year which will include:

• A review of Part II of the Landlord and Tenant Act 1954;
• Alternative models of rent payment; and
• The effect of the coronavirus pandemic on the market.