CORONAVIRUS: How Does it Affect Your Commercial Property?

Posted on 03 Apr 2020

Many businesses have been forced to close their doors to customers, or severely restrict the way they operate, and despite Government assistance in terms of waiver of Business Rates for some commercial premises, or the Coronavirus Job Retention Scheme, there is no specific assistance to help businesses who rent their property or properties with the rent. So what happens if you can’t pay your rent (or if your tenant does not pay their rent)?

The Coronavirus Act 2020 (the 2020 Act), which received Royal Assent on 25th March 2020, does help tenants in two ways, and there is some help for landlords too.

Firstly, the 2020 Act prohibits any Landlord from forfeiting the lease for non-payment of rent until at least 30th June 2020 (the Government can extend this date if it appears it needs to do so). This means that the Landlord can neither “peacefully re-enter” the property nor can they take action through the Courts. The terms “rent” in the 2020 Act is widely defined, and covers not only the basic monthly or quarterly rent, but also includes payments of service charges and insurance premiums which are also usually classified as “rent” in leases.

Secondly, if your lease is a protected tenancy (that is, it falls within the provisions for security of tenure of the Landlord and Tenant Act 1954), any arrears of rent accrued between 25th March 2020 and 30th June 2020 cannot be used by the Landlord as a ground to not provide a new lease if the tenant requests one.

So, where’s the help for landlords? Whereas the help for landlords is not as “generous” as the help for tenants, the 2020 Act does confirm that any action taken by the landlord before 30th June 2020 will not be considered as a waiver of the landlord’s “right to forfeit”, so the landlord can still take any necessary action against a tenant who was already in arrears on 25th March 2020 once the ban on forfeiture is lifted in 30th June 2020 (or a later notified date if the Government extend the protections).

Communication between landlord and tenant is going to be key during this period, and it may be that the parties that discuss matters together can agree a negotiated way through the current crisis so that businesses have the ability to thrive once they are able to trade or transact “normally” again.

If you are a Commercial Property landlord OR tenant, and are concerned about how the Coronavirus crisis may affect your lease please contact our experienced Commercial Property experts.

Please call us on 01745 812835, email us at law@swaynejohnson.com or visit www.swaynejohnson.com/contact-us .