24 March 2020 | Comment | Article by Robert Phillips

Moratorium on forfeiting commercial leases due to COVID-19 crisis

The Government announced last night that there is to be a moratorium on evicting tenants from certain commercial premises for non-payment of rent until 30th June 2020, due to the unpredictable times we find ourselves in with the COVID-19 Coronavirus. Section 82 of the Coronavirus Bill provides that as soon as the Bill is passed (which is expected very shortly), landlords cannot evict commercial tenants whether by court action or by peaceable re-entry. This comes just as the spring quarter rental payments become due on 25th March amid news that landlords and tenants are already reaching alternative arrangements about rental payments as the current COVID-19 Coronavirus crisis continues.

The bill provides some relief for landlords in the sense that nothing they do in the period the moratorium applies will waive the right to forfeit for non-payment of rent. This means they will still be able to forfeit for the non-payment when the moratorium period ends, even if they have been in negotiations with the tenant or have otherwise acted as if the lease is continuing. The only exception would be if the landlord were to expressly waive the right to forfeit in writing.

Where proceedings are ongoing in the County Court or High Court, the Court cannot make an order for possession, which takes effect before the end of the moratorium period. If such an order has already been made, tenants are able to apply to the court to vary it. If they do, the court must ensure that the tenant does not have to give possession until the moratorium ends.

The news comes at a time when many landlords will be considering it commercially unattractive to forfeit leases. Finding alternative tenants in current circumstances appears highly unlikely – at least for the time being. Landlords and tenants must however look to the future. It will be vital for landlords to understand whether the moratorium applies to their property and to ensure all arrangements are properly documented so that all parties are on a secure footing when we emerge from this COVID-19 Coronavirus crisis.

For more information or advice in relation to any of the issues discussed, please get in touch with our property dispute resolution team.

Key contact

Robert Phillips

t: 029 2267 5571

e: robert.phillips@hughjames.com

 

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

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