On 23 April 2020, the Business Secretary Alok Sharma set out a range of further safeguards for commercial tenants, due to the action being taken by some commercial landlords to obtain payment of rent despite the protective measures already brought in by the Coronavirus Act 2020.
The Government has advised that there will now be a temporary ban on the use of statutory demands and winding up petitions where a company’s inability to pay its bills is due to COVID-19. Under these new measures, any winding up petition which claims that the tenant is unable to pay its debts must first be reviewed by the court to determine why the tenant cannot pay. The court will refuse to consider such a petition further where the tenant is unable to pay as a result of COVID-19. Statutory demands and winding up petitions had been unaffected by the Coronavirus Act 2020 and were therefore being used (or threatened) by some landlords to pressure their tenants to pay outstanding rents.
The Government is also introducing legislation which will prevent commercial landlords from using Commercial Rent Arrears Recovery (CRAR and colloquially known as “sending in the bailiffs”) unless they are owed at least 90 days’ unpaid rent. Practical issues already meant that CRAR was unlikely to be used in many situations, but there is now a further hurdle for landlords to jump over, though non-payment of the March quarter’s rent (which amounts to 91 days) will get them over it.
These new measures build upon the protections brought in by the Coronavirus Act 2020 – see our previous blog post on this for details – Commercial Landlords and Covid-19. The Government has, however, been keen to warn tenants not to take unfair advantage and to continue to pay rent where they are able to do so because many commercial landlords are also experiencing financial strain. The Government’s wish is for cooperation in a spirit of fair commercial practice.
This new legislation will be in force until 30 June 2020, at which point it may be extended in line with the moratorium on commercial lease forfeiture.
For more information and guidance on your rights as a commercial landlord during these difficult times, please contact David Whitaker on 0113 280 2118 or Julian Rowden on 0114 228 3280 to find out how they can assist you with this.
If you require confidential legal advice or need representation in commercial property related matter, talk to our commercial property solicitors for sound commercial legal advice.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.