Further protections for commercial tenants struggling to pay rent

The Government has announced that it will be implementing additional restrictions on the ability of landlords to recover rent arrears from tenants.

The new measures are in addition to the restrictions introduced under the Coronavirus Act 2020, which imposed a temporary ban on the right of a landlord to forfeit a commercial lease for non-payment of rent.

The new restrictions include a temporary ban on the use of statutory demands (made between 1 March 2020 and 30 June 2020) and winding up petitions presented from Monday 27 April, through to 30 June, where a company cannot pay its bills due to coronavirus. The new measures are to be included in the Corporate Insolvency and Governance Bill 2020.

The Government has also introduced legislation to prevent landlords using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent.

This will be of particular significance to landlords as the next quarterly rent payment day looms in June. However, despite these announcements, the Government is still encouraging tenants to pay rent if they are able to, and to enter into discussions with landlords in order to reach a compromise.

We are finding that many of our landlord and tenant clients are agreeing rent payment compromises, and would remind all parties of the importance of documenting any such agreement (please see https://www.herrington-carmichael.com/covid-19-commercial-lease/ for more information).

If you require further guidance regarding the effect of the Coronavirus on commercial lease terms or advice on commercial leases in general, please contact Daniel York, Partner, in our Real Estate department or email your query to realestate@herrington-carmichael.com; call us on 01276 686222 or visit our website https://www.herrington-carmichael.com/contact/

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.

Daniel York
Partner, Real Estate
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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