Coronavirus (Scotland) Act (“the Bill”): Protection from Irritancy

• United Kingdom

• Litigation and dispute management
• Real estate
• Real estate dispute resolution
• Real estate litigation - LawBite

08-04-2020

In light of the Covid-19 outbreak both the UK and the Scottish Government have introduced measures to give both private and business tenants temporary protection from eviction and irritancy. Of particular interest for businesses is the extension of the notice period which a landlord requires to give before a lease can be irritated (terminated) if a tenant does not pay rent or other sums due under a lease. The Coronavirus (Scotland) Bill was introduced to the Scottish Parliament on 31 March and came into force on 7 April 2020. The legislation will remain in force until 20 September 2020 unless it is extended or ended early.

What won’t a commercial landlord be able to do?

Prior to the new Act coming into force, if a tenant failed to pay rent or other sums such as service charge due under a lease, the landlord could terminate the lease as long as it gave the tenant at least 14 days’ notice of the arrears and as long as the tenant did not then pay the arrears within that period. The new legislation extends the minimum period of notice from 14 days to 14 weeks. This means that while the legislation remains in force a landlord will not be able to irritate a lease on the grounds of non-payment of rent or other arrears unless the tenant has been given 14 weeks’ notice.

The legislation does not take away a landlord’s right to irritate, it just effectively suspends it meantime.

What can a commercial landlord do?

The landlord’s remaining remedies are largely unaffected. For example:

• calling on rent deposits
• pursuing guarantors
• suing for non-payment of principal rent or of any other sum[1]
• serving a statutory demand in relation to non-payment of any principal rent or of any other sums[2]
• irritating a lease for non-monetary breach (subject to the usual tests being met)
• demanding any rents or any other sums

In the absence of agreement to the contrary all rent and other sums remain fully due, demandable and payable. Interest on them also continues to accrue. The new legislation does not provide a rent holiday and nor does it affect any of the landlord’s other rights and remedies. It is purely a temporary postponement of the landlord’s right to irritate a lease for non-payment.

Given that COVID-19 poses an unprecedented threat to the whole real estate market, it is unlikely many landlords were planning to irritate purely for non-payment of monies anyway. The new Act will expire on 30 September 2020 but can be extended for two further periods of six months, meaning that it could be in place for 18 months. It is hoped that will not be necessary.

[1] Whilst still available the courts are currently accepting only urgent business so a landlord is unlikely to be unable to progress a court action unless a time-bar issue arises.

[2] Again, whilst still available in principle, winding up petitions are unlikely to be progressed by the courts.