Coronavirus Act 2020 – Business Tenancies

27 Mar 2020

The government have now enacted provisions to prevent forfeiture claims being brought against businesses as a result of the crisis.

From the 26 March 2020 to 30 June 2020 (the “relevant period”), a landlord’s right of re-entry or forfeiture arising from non-payment of rent cannot be enforced. The relevant period can be extended beyond 30 June 2020 by the Secretary of State.

Conversely, during the relevant period, a landlord cannot be said to have waived his or her right of re-entry or forfeiture, unless it is done expressly in writing.

The result of these provisions is that from 26 March 2020 until 30 June 2020, no order for possession can be enforced and any order for possession made during that period must take effect after 30 June 2020.

During the relevant period, businesses affected by the crisis may be unable to pay their rent. Previously, under the Landlord and Tenant Act 1954, landlords could oppose the grant of a new lease protected by that Act by asserting the ground under section 30(1)(b) i.e. that there has been a  persistent delay in paying rent which has become due. The Coronavirus Act provides that any failure to pay rent during the relevant period is to be disregarded under the Landlord and Tenant Act 1954.

While the proposals grant tenants welcome protection during these difficult times, it does leave landlords with mounting rent arrears which may affect their ability to pay their own mortgages and outgoings. The Government has said that a mortgage holiday will be provided by lenders and the Financial Conduct Authority has produced guidance on this issue.

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