Today (9 December 2020), Communities Secretary Robert Jenrick, announced a series of measures to protect business owners affected by the Covid-19 pandemic. These measures include an extension on the ban on evictions as a result of rent arrears; and extensions on restrictions on landlords using Commercial Rent Arrears Recovery or winding up petitions.
Forfeiture: What has changed?
As a result of the pandemic, the Government banned landlords forfeiting commercial leases as a result of their tenants’ rent arrears. This ban was due to end on 31 December 2020. However, due to the ongoing pandemic and issues for commercial tenants, this ban is now extended to 31 March 2021. This extension should assist those businesses hardest hit by the pandemic and most recent lockdown and Tier restrictions.
Commercial tenants still have a liability to their landlords for their rent. However, tenants have some peace of mind that they cannot be evicted as a result of any rent arrears. The Government has called this most recent extension a “final extension”, so it is likely that the ban will be lifted on 1 April 2021. They have said that it is to give commercial landlords and tenants “three months to come to an agreement on unpaid rent”.
We understand that the Government will publish guidance shortly.
Commercial Rent Arrears Recovery (CRAR)
The extensions don’t end there! The restrictions on landlords using CRAR to recover unpaid rent will also now extend to 31 March 2021. This means that from 25 December 2020 to 31 March 2021, a landlord will not be able to use CRAR unless the tenant has over 366 days’ rent arrears.
Statutory demands and winding up petitions
Finally, the Government announced an extension of insolvency restrictions. This means that landlords may not issue winding up petitions based on statutory demands served between 1 March 2020 and 31 March 2021.
The legislation regarding commercial rent arrears has changed (and continues to change) substantially over 2020. We will keep our blog updated with any changes. As a result of the updates, we advise you to seek specialist legal advice before taking any action. Call Ed Smith on 0800 988 7756 for a free initial discussion.
