Commercial Property Forfeiture and Rent Recovery Restrictions

12 Oct2020

It would be fair to say that 2020 has been a year of uncertainty in the commercial rental market for both Landlords (to collect rents) and for Tenants (to bring in enough money to rent).

The Government has now announced further extensions of COVID-19 protections for commercial Tenants:

  • The current forfeiture break for non-payment of rent is extended further up to 31 December 2020.
  • The limitations of Commercial Rent Arrears Recovery (CRAR) are also extended further up to 31 December 2020.
  • The restrictions on service of statutory demands and winding-up petitions are currently in place until 30 September, however, it is likely that government will provide similar extension to the existing deadline.

The expiry date of the ban on forfeiture for non-payment of rent is now put forward to 31 December without any amendment to the terms of Coronavirus Act.

Rent, insurance, service charge and interest will continue to accrue, but Landlords will need to wait a further three months before being able to take forfeiture action and claiming back their property.

Similarly, the restrictions on the use of Commercial Rent Arrears Recovery (CRAR) has been extended, so that the number of days' rent that must be outstanding before CRAR can be instigated is:

  • 276 days’ rent where a notice of enforcement is given on or before 24th December 2020; rising to
  • 366 days’ rent where a notice of enforcement is given on or after 25th December 2020.

This new deadline extension may lead to a review of any existing allowances, which were agreed between a Landlord and Tenant on the basis of previous deadline set by the government.

The Government is continuing to encourage both Landlords and Tenants to work together with regard to rent payments and arrears.

It must be noted that rents will continue to accrue, as will interest on arrears (where chargeable under the lease) and where a Tenant can pay the rents, they should pay.

If you would like advice on these points or any other Property matters, please contact Mohammed Rahman at Borneo Martell Turner Coulston Solicitors [email protected]  01604 622101