CORONAVIRUS ACT 2020: PROTECTION FOR COMMERCIAL TENANTS

A hot and necessary topic, (amongst others) created by the Coronavirus pandemic, the Government has acted quickly with the passing of s.82 of the Coronavirus Act 2020 (“CA 2020”).

This new legislation means there can be no forfeiture for non-payment of rent until July 2020, possibly later.

The government lockdown was announced just two days before the March quarter day, with the inevitable consequence that many businesses did not pay the March quarter day rent.

The reason the protection has been included is because commercial leases commonly include forfeiture or irritancy provisions which enable a landlord to terminate a lease where a tenant hasn't paid their rent for a certain period, where the tenant is in breach of their obligations under the lease or where the tenant has entered into insolvency.

The Act provides protection from forfeiture where a tenant is in arrears until 30 June 2020. It is possible that this protected period could be extended. Whilst it would perhaps be commercially unlikely that a landlord would, at these difficult times, want to exercise their right to terminate a lease,  these new measures will no doubt provide tenants in England and Wales with some short term reassurance that they will not be forced out of their business premises in the next 3 months.

Spare a thought for the landlords, who will also being having their share of pain and may also be facing cash flow problems. Some assistance may be available through some of the Government's other recently announced rescue packages such as the Government Coronavirus Business Interruption Loan Scheme for SMEs. The COVID-19 Corporate Financing Facility for larger organisations. There is also government support which may allow more time to pay tax. Check with HMRC or your accountant if you require any further help with such schemes.

Both landlords and tenants should also be checking their insurance policies and contacting their insurance brokers to see if they can claim for  any form of business interruption caused by the pandemic.

The measures introduced in the Coronavirus Act are in the meantime to be viewed in these unprecedented times as welcome news to commercial tenants in England and Wales.

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