Commercial Property Update - Protections from Forfeiture & CRAR Extended to 31 March 2021

On 9 December 2020 the Government published regulations to extend the restrictions on forfeiture of commercial tenancies for non-payment of rent in England and Wales to 31 March 2021. The extension to these protections means commercial tenants will have been afforded protection from the threat of forfeiture for an entire year.

These extended protections are being introduced in England by the Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) (No 3) Regulations 2020 (SI 2020/1472), which are due to come into force on 30th December 2020. Similarly, in Wales these protections are being introduced by way of the Business Tenancies (Extension of Protection from Forfeiture etc) (Wales) (Coronavirus) (No 3) Regulations 2020 (SI 2020/1456), which are due to come into force on 31 December 2020.

The Government’s recent announcement also confirmed that the current moratorium on the use of commercial rent arrears recovery (CRAR) will also be automatically extended to 31 March 2021.

Whilst this recent announcement will be welcomed by business tenants struggling to meet their rental obligations due to Covid-19, it will no doubt be a further blow to many commercial landlords. Landlords may however find some comfort in noting that the Government’s recent announcement refers to this extension of the moratorium as a “final extension”. That being said, given the numerous extensions to date, landlords would be forgiven for not wanting to place too much reliance on such statements.  

It is important that landlords continue to protect their right to pursue former tenants and guarantors by serving the necessary section 17 notices under the Landlord and Tenant (Covenants) Act 1995. Such notices still need to be served within 6 months of the arrears falling due, irrespective of these extended protections.

It is worth noting that the Government’s recent announcement confirmed that a review of commercial landlord and tenant legislation will be launched in early 2021. This is to include a review of a broad range of issues, including the Landlord & Tenant Act 1954 Part II, different models of rent payment and the impact of Covid-19 on the market. The outcome of this review will no doubt be of great interest to commercial landlords and tenants alike given the challenges now faced on both sides due to the Covid-19 pandemic (and the unprecedented package of protections introduced as a result).

Please contact us if you have questions about this update and would like to discuss your options by emailing: benjamin.davies@jcpsolicitors.co.uk or call: 03333 208644.