Protection for commercial tenants from forfeiture due to COVID-19

The recently enacted Coronavirus Act 2020 has provided that a right of forfeiture under a commercial/business tenancy for non-payment of rent may not be enforced during the relevant period. This relevant period is currently 26 March to 30 June 2020 which could, however, be extended if the strict lockdown measures are to continue for longer than initially envisaged.

This therefore means that commercial tenants, for whatever reason, can choose to withhold paying rent until the end of the relevant period, under the assurance that a landlord cannot re-enter the premises for such non-payment. Currently, this is the case even where a tenant can afford to pay rent, but simply chooses not to.

Landlords might now have concerns over their tenants refusing to pay rent for this period. It is imperative that a collaborative effort is made between landlords and their tenants to discuss what a tenant can realistically pay to best avoid these concerns. Rent concessions could also be negotiated, whereby a landlord can temporarily defer rental payments until after the relevant period.

There are also alternative and more drastic measures still available to a landlord for non-payment of rent. For example, these include debt recovery proceedings through the courts and asking a guarantor, if the lease provides for one. But these come with their own problems currently, especially if a tenant/guarantor truly cannot afford to pay.

If you would like any further information or advice in relation to the above, please contact a member of our team on 01384 410410 or complete our online enquiry form. We have offices in Cradley Heath, Wolverhampton and Sutton Coldfield.