In more detail
2020 has been a year of struggles in the commercial rental market - both for landlords to collect rents, and for tenants to earn sufficient revenue to satisfy their rent obligations.
The extension of commercial tenant protections introduced earlier this year in response to the COVID-19 crisis is extremely welcome news for tenants who were concerned at the prospect of imminent action for unpaid arrears. Our last client alert warned lease parties that the end of the road for such protection was in sight. In fact, that road has now been lengthened.
The expiry date of the moratorium on forfeiture for non-payment of rent introduced by the Cornavirus Act 2020 (see our previous alert here) rolls forward to 31 December without amendment in the scope or terms of that Act. Rent, insurance, service charge and interest will continue to accrue, but landlords will need to wait out another payment quarter before employing forfeiture action as a means of reclaiming and remarketing premises.
Similarly, with effect from 29 September, the restrictions on the use of Commercial Rent Arrears Recovery have been extended, so that the number of days' rent that must be outstanding before CRAR can be instigated is:
- 276 days’ rent where the notice of enforcement is given on or before 24th December 2020; rising to
- 366 days’ rent where the notice of enforcement is given on or after 25th December 2020.
A similar extension to the 30 September deadline for the rent recovery restrictions introduced by the Corporate Insolvency and Governance Act 2020 is anticipated but not yet confirmed.
This latest deadline extension may necessitate both the review of existing concessionary arrangements, which were agreed on the basis of a now superseded deadline, and the negotiation of new rent payment plans to bridge the gap. The government continues to encourage landlords and tenants to collaborate in good faith with regard to rent payments and arrears in accordance with the voluntary Code of Practice introduced earlier this year.
For further information and to discuss what these measures might mean for you, please get in touch with your usual Baker McKenzie contact.