Last year, the government introduced legislation to prevent landlords of commercial properties from being able to forfeit leases and evict tenants for non-payment of rent. Its main objective was to provide breathing space to commercial tenants impacted by the pandemic and to encourage landlords to agree arrangements, such as rent deferments or concessions, in order to help businesses survive.
The forfeiture moratorium had been due to expire on 30 June but has now been extended until 25 March 2022. The restriction on the ability for a landlord to serve a statutory demand or winding up petition will also be extended until 30 September 2021 (with the caveat being that the tenant needs to demonstrate financial hardship has arisen as a result of the pandemic). In addition, at least 554 days of rent needs to be outstanding before a landlord may attempt to seize a tenant’s goods through the CRAR procedure. The government has also gone one step further and will be introducing a legally binding arbitration process for instances where the parties cannot reach an agreement. The date is yet to be set for when this will become compulsory, so in the meantime landlords will continue to have the ability to bring court proceedings against tenants for unpaid rent. Landlords also currently retain the ability to enforce against other security under the lease, such as seeking unpaid sums from a guarantor.
The government guidance and legislation regarding commercial rent arrears has changed frequently since the start of the pandemic and it can understandably be very difficult for landlords and tenants to navigate it all. It is important to seek specialist legal advice before taking any action.