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Impact of the Coronavirus Act 2020 on Commercial Leases

The impact of the Coronavirus is being felt throughout all sectors and the property market is no exception. Here Stephen Kell, partner in our property and property litigation team, discusses the impact of the recent Coronavirus Act 2020 on commercial leases.

The Coronavirus Act 2020 (“CA”) came into force on 25 March 2020, coinciding with the accrual of the quarterly rent payment under most commercial leases. The provisions contained in Section 82 of the CA apply to all tenancies to which Part II of the Landlord and Tenant Act 1954 applies (including “contracted out” tenancies) to give protection from forfeiture.

Importantly, the CA contains no moratorium on the payment of rent. Instead, the CA operates to place restriction on the landlord’s right to forfeit for non-payment of rent contained in the vast majority of commercial leases.

For the extent of the “Relevant Period”, which came into force on 25 March 2020 and (at present) will expire on 30 June 2020, landlords may not commence any action for forfeiture for non-payment of rent, nor are they permitted to forfeit by taking peaceable re-entry of commercial premises on the grounds of non-payment of rent.

The CA does not, however, prevent action for forfeiture for breaches other than non-payment of rent.

In respect of actions for forfeiture for non-payment of rent which were subsisting as at the date the CA came into force, the CA prevents any order requiring the tenant to give possession within the Relevant Period.

Tenants should be aware that there is no postponement of the liability to pay rent as it falls due. Landlords are able to take action other than forfeiture in respect of arrears of rent, subject of course to any further restrictions (particularly in insolvency procedures) which may be brought into force.

The CA also provides that, during the Relevant Period, no conduct on the part of the landlord, other than expressly confirming so in writing, is to be taken as a waiver of the right to forfeit for non-payment of rent.   Accordingly, tenant’s should be aware that any right to forfeit for non-payment of rent which cannot be enforced during the Relevant Period (or any extension of the Relevant Period) will be enforceable as soon as the Relevant Period (or any extension thereof) expires.

 

If you are a landlord or tenant, our dedicated property and property litigation team is here to help you. Talk to the team today on 01482 325242 or email us: enquiries@andrewjackson.co.uk for legal advice and services that are tailored to your particular circumstances.

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    Call us

    Hull+44 (0)1482 325 242

    York+44 (0)1904 275 250

    Grimsby+44 (0)1472 267 770

    Scarborough+44 (0)1723 882 500

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