Government Announces Commercial Tenancy Forfeiture Moratorium

The Government has announced a support package for commercial tenants and landlords affected by the Covid-19 coronavirus.

On Monday the Government announced a moratorium on new forfeiture proceedings against commercial tenants who miss rent payments. Clause 82 of the Coronavirus Act 2020, which received Royal Assent on 25 March 20202, the usual quarter day, holds that:

A right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent may not be enforced, by action or otherwise, [between 26 March 2020 and 30 June 2020].

The Act also contains a provision to extend the moratorium if required and any new possession orders made in existing enforcement proceedings will not take effect until the end of the moratorium.

This does not mean that the Government has announced either a rent holiday or a deferment of rent payments. Any commercial tenant struggling to make a March or June payment should bear in mind that their landlord will still be able to bring a claim if the March or June payments remain unpaid at the end of the moratorium. As ever, such a claim would likely include interest on the unpaid rent and legal costs.

The Act also makes a change to the usual waiver provisions. In normal circumstances, discussing a rent reduction or freeze with a tenant when they are in arrears may waive the landlord’s right to forfeit in respect of that unpaid rent. Up until the end of the moratorium Clause 82.2 of the Act stipulates that:

no conduct by or on behalf of a landlord, other than giving an express waiver in writing, is to be regarded as waiving a right of re-entry or forfeiture […] for non-payment of rent.

Accordingly if paying commercial rent is an issue both tenants and landlords should open discussions as soon as possible.

For up-to-date legal advice and representation in this or any other property litigation matter contact Grant Saw’s litigation team.