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News - 25/03/2020

COVID-19: Advice for commercial landlords in respect of forfeiture

Government announces moratorium on Coronavirus-related commercial forfeiture

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On Monday 23 March 2020, the UK Government announced that commercial tenants who are unable to pay their rent because of Coronavirus will be protected from eviction. Great news for occupiers but what does it mean for landlords?

A helping hand

While many landlords and tenants are already engaged in dialogue regarding rental concessions or alternative payment structures in order to lessen the impact on short-term cash flow, the proposed measures which form part of the emergency Coronavirus Bill will provide assurance for businesses that they will not be forced out of their premises if they miss a rental payment over the next three months.

Late or missed payments

Landlords worried about having to write off missed payments needn’t be. The rent and service charge will still lawfully be due and interest will be accrued on any late or missed payments under the terms of the lease. If the arrears remain unpaid after the relevant period ends, which could be subject to change if the Government deems it necessary, the landlord can exercise its re-entry rights.

Who does it apply to?

The measures will apply to all leases under the Landlord and Tenant Act 1954 on properties across England, Wales and Northern Ireland, irrespective of whether the reason for non-payment is as a result of COVID-19 or not. However, they will not affect a landlord’s right to forfeit for any other reason. If a rent review falls within the relevant period the particular clause would also need to be considered and while unlikely to have a direct impact it should be checked nonetheless.

Next steps

The Coronavirus Bill is currently being rushed through Parliament so it is not yet law. However, we’re actively encouraging landlords to engage with their tenants during this difficult period to explore all options available to them, particularly in relation to any business rates reliefs or grants that they may be entitled to. You can find more guidance in relation to this on our business rates page.

How can we help?

This situation and Government guidance is evolving daily and we will continue to update our clients as more details are unveiled. In the meantime, should you have any specific concerns or requests please don’t hesitate to get in touch and we will do our utmost to provide you with the best advice during these unprecedented times.

 

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