Extra protection for businesses with ban on evictions for commercial tenants who miss rent payments

Kerman & Co. website
March 24, 2020 Advisory

The Government have recently published an update on helping business tenants who miss rent payments because of coronavirus, the full article is here.

To summarise the key points:

  • The communication refers to tenants who are ‘unable’ to pay their rent. The implication is that there must be genuine and provable grounds (e.g. severe disruption to cash flow – and for many, the bar to that qualification must surely now have been lowered in light of enforced closure of all non essential retail outlets) in order to benefit from this concession. As such, it is likely that the application will be to those who can’t pay rather than those who simply won’t pay.
  • How this will translate into practicality is yet to be seen – for example, will it become simply unlawful for a landlord to instruct a bailiff to exercise peaceable re-entry in cases of rent arrears – remember, where pure commercial (i.e. there is no residential element) property is concerned, a landlord can exercise the ‘self-help’ remedy of peaceful re-entry – a court order for possession is not required.
  • Further clarity will also be required upon the position where, for example, landlords seek to circumvent the new law by issuing statutory demands  – as a threat of insolvency, rather than exercising the forfeiture provision in the lease. Given that the ethos of this new legislation is to support small businesses at a critical time and to give peace of mind to those struggling with cash flow, it is perhaps to be expected that the courts will frown upon any attempt to usurp the legislation and seek remedy by the back the door.

Further details and commentary will follow once the legislation has been framed and receives Royal Assent.

Originally published at Kermanco.com prior to the firm’s combination with Armstrong Teasdale in early 2021.

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