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Provisions to prevent forfeiture of leases of business tenants for non-payment of rent, whether by peaceable re-entry or Court action, were introduced by the Coronavirus Act 2020 for an initial period to 30 June 2020 (“the Relevant Period”).
Regulations to come into force on 29 June 2020 have now extended the Relevant Period to 30 September 2020.
This means landlords of business tenant will be unable to bring an end to leases for non-payment of rent until after 30 September. There is in any event a stay on possession proceedings generally, with limited exceptions, under the Civil Procedure Rules until 23 August 2020.
The Coronavirus Act 2020 also included other provisions to assist business tenants unable to pay rent. Any order in existing proceedings to enforce a right of re-entry for non-payment of rent should not specify a date for possession before the end of the Relevant Period; in the County Court any existing order requiring the tenant to give up possession during the Relevant Period was treated as extended to the end of the Relevant Period and in the High Court the tenant who failed to comply with some requirement under such an order (for example to clear the arrears) could apply to vary the order in which case the High Court had to ensure the tenant did not have to give possession before the end of the Relevant Period. A landlord is also prevented from relying on the non-payment of rent during the Relevant Period as the reason for opposing the grant of a new lease to an existing business tenant under the Landlord and Tenant 1954. The extension of the Relevant Period will also extend the protection given business tenants by these provisions.
To encourage dialogue between landlords and tenants the Coronavirus Act 2020 provides that no conduct by a landlord (or someone acting on their behalf) will be regarded as waiving the right to forfeit except an express waiver in writing. This helps preserve the landlord’s ability to end a lease for non-payment of rent once the Relevant Period does come to an end (unless otherwise agreed).
Many landlords will be in discussions with tenants seeking to agree concessionary arrangements, recognising the benefits of trying to secure at least some payment and/or help the business survive the impact of COVID-19. A voluntary Code of Practice has now been published by the Government, endorsed by various property representatives and organisations, to apply to 24 June 2021. This sets out various principles, recognising the mutual interest of both landlords and tenants in business continuity, and, whilst the Code is voluntary, the expectation of collaboration and transparency in trying to agree new arrangements.
To avoid future arguments, it is important that any concessionary agreements are clearly documented and set out exactly what the arrangements are.
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