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Anna Duffy head of property

The House of Commons has passed a moratorium on forfeiture for non-payment of rent by business tenants. This was part of the wide-ranging emergency Coronavirus Bill that has now been approved by the House of Lords and soon to be enacted.

The position appears to be as follows;

  1. No forfeiture is possible for non-payment of rent by business tenants between now and 30 June. The moratorium period is extendable by the government
  2. “Business tenants” means any lease protected by the 1954 Act or which would be protected if the lawful occupier was also the tenant.  It would seem to exclude from this protection leases excluded from the 1954 Act
  3. “Rent” is defined as meaning any sum which a tenant is liable to pay under a business tenancy, whenever due.  It would therefore appear to cover service charge etc
  4. During this period, the landlord cannot waive the right to forfeit except by an express waiver in writing

So the rent remains due and, so far as it appears at present and does not prevent claims against guarantors, although things might change further over the next few weeks. Nor does it prevent exercising the procedures under the Landlord and Tenant Act 1954 or the serving of notices under that Act.  The right to forfeit for other breaches (e.g. use) would appear to be preserved, although there are many reasons why landlords will not want to exercise these rights for the moment and instead reach an accommodation with their tenants avoiding business rates, insurance and security liabilities that will fall on landlords.

It is in that context helpful that (absent an express waiver) doing so will now not result in the inadvertent waiver of the right to forfeit later on.

Landlords still retain their other remedies for recovering unpaid rent but, with shops and offices closing down in line with Government guidance, commercial rent arrears recovery will not be practicable and landlords are left with debt claims or placing their tenants into insolvency. Consequentially, discussions between landlords and tenants to structure rental payments are very much the way forward for the moment.

Lastly, landlords will not be able to use delays in tenants paying rent over the next three months as a reason for opposing a lease renewal under the Landlord and Tenant Act 1954 on the ground of persistent delays in paying rent.

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