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Legal changes

Government announces a further extension to the moratorium on forfeiture of business tenancies

On 10 March 2021, the Government announced that commercial tenants will continue to be protected from the risk of eviction until 30 June 2021.

A moratorium on business evictions due to non-payment of rent was introduced at the start of the pandemic with the aim to provide greater security to commercial tenants, protect vital jobs and to reduce the risk of closure to businesses worst affected by the pandemic. This further announcement will mean that business tenants have received protection from the threat of eviction for more than one year.

Background

The restrictions on the landlord’s ability to forfeit a commercial lease for non-payment of rent began on 26 March 2020 for a three-month period. The Government has continued to extend these restrictions which have now been in place for nearly one year.

The moratorium on commercial forfeiture applies to breaches for non-payment of rent only. It does not apply to breaches of other tenant covenants.

In the announcement, the Government stated that the restrictions will be extended for a further three months to 30 June 2021. It was stated that the decision will help those worst affected by the pandemic, such as bars and restaurants and to ensure that businesses are supported as they re-open.

Housing Secretary Robert Jenrick stated that “these measures build on the government’s action to provide financial support as restrictions are lifted over the coming months – extending the furlough scheme, business rates holiday and the Universal Credit uplift”.

On what legal basis?

The Coronavirus Act 2020 (‘CVA’) came into force on 26 March 2020 as an emergency measure.

The express restrictions concerning forfeiture or re-entry for non-payment of rent that apply to ‘relevant business tenancies’ are contained within Section 82 of the CVA. This includes but is not limited to:

  • A right of re-entry or forfeiture for non-payment of rent may not be enforced, by action or otherwise;
  • No conduct by or on behalf of a landlord is to be regarded as waiving a right of re-entry or forfeiture for non-payment of rent, unless the landlord gives an express waiver in writing; and
  • An order for possession made by the High Court must ensure that the tenant does not have to give possession before the end of the relevant period.

Further announcements

The restrictions on commercial landlords recovering unpaid rent by the exercise of commercial rent arrears recovery (CRAR) will also be extended in line with the moratorium.

It was confirmed that a review of commercial landlord and tenant legislation will take place later this year. This will consider Part II of the Landlord & Tenant Act 1954, different models of payment of rent and the impact of the pandemic on the market.

It was also announced that there will be a ban on bailiff-enforced evictions for residential tenants in all but the most serious of circumstances.

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