The coronavirus pandemic has resulted in unparalleled challenges for our families and our businesses. The government has published its coronavirus COVID-19 action plan https://www.gov.uk/coronavirus but the situation is rapidly evolving and landlords and tenants must consider their position and the potential impact of coronavirus COVID-19.
Under measures introduced by The Coronavirus Act 2020 https://www.gov.uk/government/news/extra-protection-for-businesses-with-ban-on-evictions-for-commercial-tenants-who-miss-rent-payments which became law on 25 March no business will be forced out of their premises if they miss a rent payment in the next 3 months. Forfeiture of a lease or peaceable re-entry (effectively changing the locks) has been suspended by the Government until 30 June 2020 (with provision for this to be extended). Equally during this period no action by a landlord (other than giving an express waiver in writing) will be regarding as waiving a right of re-entry or forfeiture for non-payment of rent. These measures protect businesses that are struggling with their cashflow.
The rent, which includes service charges and insurance contributions, remains due and payable by the tenant. This current suspension until 30 June is simply a grace period where the landlord cannot take this action for non-payment of rent.
In some cases commercial landlords are already working closely with their tenants by offering rent deferrals or rent holidays. Other options include agreeing to monthly rent payments, rent concessions or the parties agreeing that the Landlord can drawdown on rent deposits funds. In those circumstances consideration would need to be given as to when the deposit would need to be topped up. Any available business interruption cover for insurance purposes should also be reviewed. Opening a dialogue and ensuring a collaborative approach preserves the landlord and tenant relationship for the future.
In the longer term, many tenants will need to consider whether to operate the break clauses and subletting provisions in their leases.
Landlords and tenants will need to consider their options based on the particular circumstances of their case and specific legal advice should be sought before any steps are taken.
For more information or guidance please contact Sarah Beney on 020 7251 3663 or email at sarah.beney@ad-solicitors.co.uk
Sarah Beney, Solicitor, Abrahams Dresden LLP
Abrahams Dresden articles and guidance notes are for general information purposes only and generally state the law as at the date of publication. The information may not be relied upon as legal advice. We are of course always happy to advise directly on specific issues arising.