Restrictions on Commercial Landlords Further Extended

Expert lawyers say the announcement that the Government is to further extend the restrictions on commercial landlord action for non-payment of rent by business tenants, means that private agreements made between the two parties are now more important than ever.

Communities Secretary Robert Jenrick has announced that the restrictions will be extended until the end of June 2021, having already extended the period three times previously since the introduction of restrictions in March 2020.

Jenrick repeated the mantra that businesses which can pay rent should do so, while also announcing support for the businesses worst affected by the pandemic.

Nicola Seager, partner in the property litigation team at Clarke Willmott LLP, said: “The government have made it clear that their current position is to support commercial landlords and tenants to agree their own arrangements for paying or writing off rent debts by 30 June.

However, if these discussions do not happen and there remains a significant risk to jobs, the government have confirmed that they are also prepared to take further steps. It is not yet clear what form those steps would take.

“The government has also confirmed that a review of commercial landlord and tenant legislation will be launched later this year and will consider a broad range of issues including the Landlord & Tenant Act 1954 Part II, different models of rent payment, and the impact of Coronavirus on the market.

“This is the first time that the government has mentioned writing off rents in any of its announcements. That reference and the mention of “legislative options” targeted at businesses hit hardest by COVID-19, if the failure to agree terms for payment or writing off rents continues to present a threat to jobs, perhaps hints that the government might be prepared to override lease terms, a step unlikely to be welcomed by landlords or their funders.

“The announcement makes co-operation and communication between landlords and tenants ever more important as we all look to emerge from the pandemic with viable businesses.”

The announcement confirmed that:

• Landlords will not be permitted to forfeit business leases for non-payment of rent until after 30 June 2021.
• CRAR restrictions have been extended by increasing the number of days’ outstanding rent required for CRAR to be used to 457 days’ between 25 March and 23 June, and 554 days’ between the 24 and 30 June.

Nicola Seager specialises in contentious real estate management and development at Clarke Willmott which has offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton.

For more information please visit www.clarkewillmott.com