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Lawbite: Extension of forfeiture moratorium

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

11-03-2021

The Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) Regulations 2021 and The Business Tenancies (Extension of Protection from Forfeiture etc.) (Wales) (Coronavirus) Regulations 2021

The Government and Welsh Government have announced that the moratorium on forfeiture of business tenancies for arrears of rent is being extended in both England and Wales from 31 March 2021 to 30 June 2021. The Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) Regulations 2021 and The Business Tenancies (Extension of Protection from Forfeiture etc.) (Wales) (Coronavirus) Regulations 2021 both come into force on the 31 March 2021. 

When the existing extension was announced by the Government at the end of last year it was declared to be the final extension to the provision originally enshrined in the Coronavirus Act 2020.  The course of the pandemic since that announcement has clearly affected the Government’s position on the matter and further support has been deemed necessary for commercial tenants.

The Government also intends to extend the restriction on landlords’ abilities to use the Commercial Rent Arrears Recovery (CRAR) scheme for enforcement. Regulations will be laid before parliament to increase the total number of days for which rent must be outstanding to use CRAR to 457 days’ between 25 March and 23 June, and 554 days’ between the 24 and 30 June.

We are waiting to hear whether the temporary measures put in place to protect businesses from insolvency by the Corporate Insolvency Governance Act 2020, in particular those limiting the use of statutory demands and winding-up petitions, will be extended from 31 March 2021.

The announcement also confirmed that the review of commercial landlord and tenant legislation (mentioned when the last extension was announced) will be launched later this year.  The review will consider a broad range of issues including the Landlord & Tenant Act 1954 Part II, different models of rent payment, and the impact of Coronavirus on the market.

Key points

  • the moratorium applies to the forfeiture of business tenancies for arrears of rent (with rent widely defined) and has been in place since 25 March 2020
  • landlords may well be dismayed by the announcements.  Their ability to enforce against defaulting tenants have been severely limited over the course of the pandemic. It is said that rent arrears are already estimated to be in the region of £4.5 billion and will only increase once we hit the March quarter date at the end of the month
  • Landlords are still able to pursue claims for debts through the courts.  It was recently announced that due to the volume of rent arrears claims being commenced in the High Court uncontested rent arrears claims (low and high value) will be transferred to the Central London County Court
  • In the same announcement the Government confirmed that the ban on bailiff-enforced evictions of residential tenants in all but the most serious circumstances will also be extended until at least 31 May 2021