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Lawbite: Further breathing space for tenants – forfeiture moratorium extended

  • United Kingdom
  • Litigation and dispute management
  • Real estate
  • Real estate litigation - LawBite

21-09-2020

The Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) (No. 2) Regulations 2020

The Government has announced that it is extending the forfeiture moratorium in England until 31 December in a bid to protect tenants from the risk of eviction and in turn to help those businesses affected to save jobs.

The moratorium, imposed by section 82 of the Coronavirus Act 2020, applies to the forfeiture of business tenancies for arrears of rent (with rent widely defined). It was originally due to be in place until 25 March but was then extended, more recently to 30 September. With that extension fast approaching those tenants unable to pay rent due to the effects of the pandemic on business were naturally concerned that 1st October could mark the end of their lease, a key asset for any business.

The Government announcement makes it clear that the moratorium is there to assist those businesses who truly need the support and reiterates the message that those businesses that are able to pay, should do so.

The Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) (No. 2) Regulations 2020 come into force on 29 September.

Landlords whose tenants are in arrears will now be evaluating their options but should note the recent further temporary changes to the Commercial Rent Arrears Recovery (“CRAR”) procedure. The Taking Control of Goods (Amendment) (Coronavirus) Regulations 2020, which come into force on 29 September 2020, extends the minimum amount that must be outstanding before the landlord is able to recover arrears using CRAR to an amount equal to 276 days’ rent where the notice of enforcement is given on or before 24th December 2020 and 366 days’ rent where the notice of enforcement is given on or after 25th December 2020. This restriction also applies until 31 December.

Key points:

  • A sudden end to the moratorium could have spelt disaster for many tenants, who simply could not afford to settle their arrears. However, this latest extension will come as a further blow to landlords, who are also suffering from the pandemic. A mechanism that provides for a gradual reintroduction of landlords’ remedies may need to be considered
  • The moratorium was already due to be extended until 31 December 2020 in Wales by the Business Tenancies (Extension of Protection from Forfeiture etc.) (Wales) (Coronavirus) (No. 2) Regulations 2020 which come into force on 30 September 2020

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