Commercial landlords and tenants: your rights during the coronavirus pandemic
The current pandemic has caused financial hardship for both landlords and tenants. Our senior solicitor Tom Hickingbottom outlines the law as it stands
It's a tough time for commercial landlords and tenants alike. The continuing lockdown and resulting economic damage is creating cash-strapped tenants and beleaguered landlords. Here are your key questions and the answers you need to know.
Landlords are now prevented from re-entering a property or ‘forfeiting’ a lease to respond to non-payment of rent (Section 82 of the Coronavirus Act 2020).
What does forfeiture mean?
‘Forfeiture’ is the right of landlords to terminate a lease – either by legal proceedings or peaceful re-entry – in order to regain possession following a lease breach by a tenant.
How long will the changes last?
The restriction on the rights of the landlord will apply from the date the act came into force: 26 March 2020 until 30 June 2020. It should be noted that the act makes provision for this period to be extended.
What does it mean for me?
Section 82 of the act is intended to protect commercial tenants from eviction where they cannot pay rent as a result of COVID-19 government-imposed restrictions. However the act doesn’t distinguish between rent arrears before the act came into force, and rent arrears incurred as a genuine result of the outbreak.
So any tenant, regardless of their financial position, may take advantage of the act. But tenants who can afford to pay rent should think carefully before withholding payments to landlords.
Do I have other powers to recover rent?
Yes. It only protects tenants from forfeiture for non-payment of rent. But rent itself is given a wide definition, applying to ‘any sum a tenant is liable to pay under a relevant business tenancy’. No ‘rent-free period’ or ‘rent holiday’ is created by the act. Rent remains payable. And landlords can use other legal methods to deal with lease breaches.
What options do I have?
Negotiation is a great start. Try to understand each other’s situation and come to an agreement that works for both parties. This approach is not just recommended but encouraged by the Government.
That said, when it comes to the hard facts, the law is the law.
Landlords and tenants alike need to remember that nothing in the act will prevent a landlord:
- Suing a tenant or guarantor for unpaid rent
- Serving a statutory demand
- Claiming interest on any unpaid rent in accordance with the lease
- Deducting payment from any deposit or bond
- Using Commercial Rent Arrears Recovery.
In normal circumstances these options would amount to a waiver of the tenant’s breach, and prevent the landlord from exercising their right of forfeiture or re-entry. Landlords should note that the act specifically states that no actions on behalf of a landlord, other than an express waiver in writing, is to be regarded as waiving the right of re-entry or forfeiture for non-payment of rent.
But the act says nothing about waiver of the breach. This may mean that a landlord who exercises one of the options above to remedy a breach of the lease will be prevented from relying on that same breach in later forfeiture proceedings or as a grounds for re-entry.
Tenants who want to use a break clause to vacate their property need to ensure they’re up-to-date with all rent payments (if that’s stated in the conditions of the clause).
Do the changes apply to me?
Section 82 of the act applies to ‘relevant business tenancies’ meaning it will apply to most business tenancies but will exclude:
- Farm Business Tenancies and other tenancies expressly excluded from Part 2 of the Landlord and Tenant Act 1954
- Licences to occupy
- Tenancies at will.
If you’d like to discuss your rights as a landlord or tenant and require advice please contact Tom Hickingbottom, Senior Solicitor on 01522 515 594 or email: email@example.com
The Government's latest guidance on rent and commercial premises can be found here
Here you can read section 82 of the Coronavirus Act 2020