You may have read our earlier blog, “Coronavirus – Restrictions on Forfeiting a Commercial Lease” which explained that new emergency legislation had been introduced to ban Landlords forfeiting a commercial tenancy for non-payment of rent until 30 June 2020. To read the blog in full please click here.
Since writing that blog, the Government has imposed more restrictions which prohibit commercial Landlords taking certain types of enforcement action against Tenants who have not paid their rent.
In our earlier blog we explained that for the period 26 March 2020 to 30 June 2020:-
- Landlords cannot take steps to end a business tenancy on the grounds of non-payment of rent or other sums falling due under the Lease; and
- Where forfeiture proceedings were commenced before 26 March 2020, any date for possession cannot be before 30 June 2020.
Our blog then went on to set out the other enforcement options open to a Landlord and the issues a commercial Landlord should be thinking about.
The new restriction
The Government have now announced further restrictions on a commercial Landlord’s enforcement options.
Action under the Commercial Rent Arrears Recovery (CRAR)
Action under the Commercial Rent Arrears Recovery (CRAR) is a common method of enforcement in a Landlord’s armoury. The main changes are:
- For enforcement notices served between 25 April 2020 to 30 June 2020, a Landlord may only exercise CRAR where the minimum amount of net unpaid rent is equivalent to 90 days rent (changed from 7 days).
- A 12 month extension to the date by which the enforcement agent must take control of goods. This applies where on 26 March 2020 there is less than one month remaining before expiry of the period during which control may be taken of goods, or where the period is due to expire while restrictions are in place, the period for taking control of goods is extended by 12 months.
These restrictions are aimed to help Tenants who are struggling financially during the pandemic and gives them some breathing space to try and resolve matters/reach an agreement with the Landlord before CRAR action is taken.
The Government is asking Landlords and Tenants to cooperate ‘in the spirit of fair commercial practise’. The Government also encourages Tenants to ‘pay rent where they can afford it or what they can in recognition of the strains felt by commercial Landlords too’.
The above came into effect from 25 April 2020 pursuant to the Taking Control of Goods and Certification of Enforcement Agents (Amendment) (Coronavirus) Regulations 2020.
Restrictions on serving a Statutory Demand
The service of a Statutory Demand was always a very effective way of recovering monies due to a commercial Landlord.
The proposed changes are that where a Tenant is unable to pay the sum claimed due to coronavirus a Landlord will now be prevented from:
- serving a Statutory Demand for the period 1 March to 30 June 2020; and
- presenting a Winding Up Petition for the period 27 April to 30 June 2020.
We advise both employers and employees. If you would like employment advice regarding the Scheme or any other employment issue please do not hesitate to contact us to arrange a telephone/video appointment.
Please note the above is for information purposes only and is intended to be a short summary. It should not be treated as a comprehensive guide and should not be acted on without qualified legal advice.
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We advise both employers and employees. If you would like to get in touch with one of our Employment Solicitors, then please call 01323 727321. Or alternatively, please fill in the form below and someone will be in touch.
Author: Jacqueline Penfold. Litigation and Employment, Partner