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Report

The impact of the COVID-19 pandemic on commercial property rents

Following the previous extension, the Government has now announced a consultation regarding the current restrictions.

The Government has previously announced that commercial tenants will continue to be protected from the risk of eviction until 30 June 2021. Following on from this, the Government has now announced a consultation regarding the current restrictions.

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 over one year. The restrictions are currently in place until 30 June 2021.

In addition, there are restrictions on the use of Commercial Rent Arrears Recovery (CRAR). The restriction on this kind of enforcement is currently in place until 30 June 2021.

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.

A ‘relevant business tenancy’ is defined as a tenancy to which Part II of the Landlord and Tenant Act 1954 (LTA 1954) applies.

The restrictions on CRAR were established by the Taking Control of Goods (Amendment) (Coronavirus) Regulations 2021.

The consultation

The Government has now published a request for evidence regarding the impact of the Covid-19 pandemic on commercial property rents in an aim to gain an understanding as to how landlords and tenants are responding to rent arrears that have accumulated over the last year.

It is stated that this will provide an understanding of the risk of economic recovery and inform Government policy on the best way to proceed with the current restrictions in consideration of outstanding debts and existing lease terms.

If it appears from the responses that there is a substantial threat to jobs and livelihoods, the Government has stated that it will not hesitate in intervening.

The call for evidence is set to close on 4 May 2021.

For more information please see our Landlord and tenant page.

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