Business tenants protected against eviction until March 2021
The Government has further extended its ban on landlords evicting business tenants for failure to pay rent until the end of March 2021. Abi Lutey, Partner and Head of Commercial Disputes at Coodes Solicitors explains the implications for landlords and tenants.
The Government has announced that it will continue its freeze on commercial property evictions until 31 March 2021.
The new regulations came into force on 8 December and are an extension of emergency legislation, introduced during the Covid-19 pandemic. The freeze on evictions, which is known as a moratorium, was first introduced in March 2020, in the Coronavirus Act. It has since been extended a number of times. The temporary ban on evictions is designed to protect businesses that are struggling with cashflow as a result of the pandemic and Government restrictions.
A further restriction to Commercial Rent Arrears Recovery (CRAR)
Landlords were previously restricted from using CRAR unless seven days’ rent was owing. This was restricted during the pandemic, firstly to 90 days, then 276 and will again be increased to 366 days from 25 December until 31 March 2021.
A review of business tenancies
The Government describes this as the “final extension” to the moratorium. It has also announced that early in the New Year, it will conduct a review of commercial landlord and tenant legislation. In a press release, the Government stated that this “will consider how to enable better collaboration between commercial landlords and tenants and also how to improve the leasing process to ensure our high streets and town centres thrive as we recover from the pandemic and beyond.”
We will keep a close eye on news of this review so we can update our clients.
Communicating and negotiating over rent arrears
The legislation has been extended to give businesses breathing space to deal with rent arrears. It is important to remember that it does not provide commercial tenants with a ‘rent holiday’. Rent and other payments set out in leases become due and payable as usual. The moratorium simply delays landlords taking action against a business tenant that has not kept up with rent payments.
Our ongoing advice is to keep channels of communication open and, as far as possible, work together to reach a solution that suits both parties. The Government’s Code of Practice is a useful guide for landlords and tenants at this challenging time.