Commercial Leases in the Pandemic: Protection for Tenants Extended Again

The provisions introduced by the Government as a result of the pandemic to prevent landlords of commercial properties from evicting tenants for non-payment of rent (i.e. forfeiture of the lease) which were due to expire on 30th June 2021 have been extended again until 25th March 2022.

 

The extension applies to all commercial lettings whether or not the tenant has been able to open the premises for business during the pandemic.  However, the Government has made it clear that businesses who are able to pay the rent must do so.

 

As soon as the protection for tenants is lifted in March 2022 any arrears of rent which accrued before March 2020 and for the period after the date when trading restrictions affecting the relevant tenant’s business were removed will again give the landlord an immediate right to forfeit the lease.

 

The Government has said that legislation will be introduced in the current parliamentary session to “ring-fence” arrears of rent but, importantly, only those arrears which have accrued while a business has been obliged to remain closed during the pandemic.

 

Landlords will be expected to make allowances for the ring-fenced rent and, according to the Government, “share the financial impact with their tenants”.  That might involve a long-term repayment plan or simply writing off some or all of the rent.  The Government will expect landlords and tenants to work together to reach a settlement.

 

For landlords and tenants who cannot reach a compromise over the ring-fenced rent the Government will be introducing by March 2022 a mandatory arbitration process ending in a decision binding on both parties.

 

This is a rapidly changing area of law which Blackhams will continue to keep under review.

 

To speak to our Property Solicitor Peter Smart, call us on 0121 233 6912 or email psmart@blackhams.com