Landlords are currently unable to forfeit commercial leases as a result of non-payment of rent. This is a temporary ban which has been implemented as a result of the Covid-19 pandemic. Please read our updated article on this topic.

Please read our updated article on this topic

 

 

There are also restrictions on a commercial landlord’s right to the recovery of rent via Commercial Rent Arrears Recovery (CRAR). For any action brought by a landlord using CRAR between the 25 March 2021 and 23 June 2021, there must be a minimum of 457 days’ of rent outstanding. If the action is brought between 24 June 2021 and 30 June 2021, there must be no less than 554 days’ of rent outstanding.

What options does this leave open to a landlord faced with a tenant refusing to pay rent? Possible enforcement actions include claiming against any guarantors, drawing down on rent deposits and enforcing a right of re-entry for breach of non-rent covenants. In addition, landlords could commence civil court proceedings for rent arrears.

In the recent case of Commerz Real Investmentgesellschaft MBH v TFS Stores Ltd the court found against a commercial tenant who had failed to pay its rent since April 2020. The tenant, who leased a store in a Westfield Shopping Centre which was forced to close due to Covid-19,  argued that the landlord was exploiting a loophole in the government restrictions, and that the landlord should be insured against the loss of rental income. The court did not accept this and gave a judgment in the landlord’s favour for the full amount of outstanding rent. The outcome of this case suggests that landlords are therefore in a strong position in respect of claims for rent arrears. It should be noted however that the steps a landlord may take to enforce any judgment made in its favour may be restricted as a result of other Covid-19 related restrictions.

While commercial tenants will no doubt have welcomed the extensions of temporary restrictions on forfeiture and the use of CRAR as referred to above, the above case underlines the fact that a temporary ban on forfeiture for non-payment of rent does not discharge a tenant’s contractual obligations.

If you would like to discuss this article or would like any further information, please do not hesitate to contact Thomas Parkes on 01904 561478 or thomas.parkes@luptonfawcett.law.

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.

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