Business Tenancies and The Coronavirus Act 2020
On 23 March 2020, in an attempt to reduce the spread of the coronavirus, the government announced that non-essential shops such as food and drink establishments, retail shops, hotels, non-residential institutions, leisure venues and outdoor recreation grounds must close.
This was naturally a cause for concern for landlords and tenants of premises where such activities are carried out and where they rely on them for income. For the vast majority, it is unlikely that their lease contains a ‘force majeure’ clause which are more usually found in other commercial contracts.
It is likely then that the Coronavirus Act 2020 (“the Act”) which received Royal Assent on 25 March 2020 contains welcome relief for tenants. Clause 82 of the Act contains provisions in relation to Business Tenancies in England and Wales. In particular, the Act has implemented a moratorium on forfeiture where a business cannot make rent payments for the next 3 months.
Forfeiture refers to the ability of a landlord to peaceably re-enter the premises and take possession where their tenant has breached the terms of the tenancy (for example failing to pay rent). The Act therefore offers some additional protection to commercial tenants that are unable to pay their rent due to Covid19 and goes some way to encouraging both landlords and tenants to act collaboratively in these unprecedented times.
It is understood that the government is monitoring the impact the 3 month moratorium on forfeiture will have on landlords and it should be noted that the measures do not apply to other tenant breaches. Nor does it prevent a landlord form pursuing other remedies. Furthermore, no conduct by the landlord will act as a waiver of the right of re-entry for non-payment of rent (other than an express waiver in writing).
The provisions of Clause 82 apply from 26 March 2020 until 30 June 2020 with this date being capable of extension by the government.
The effects of Covid19 and the steps the government are taking are unprecedented and it appears that landlord and tenants are engaging and entering concessions agreeable to both. What is important is that the terms of any concessions are documented clearly.
We can help both tenants and landlords and if you require any help drafting acceptable documentation or advice in relation to any of the above please contact the property litigation team on 01752 203500 or firstname.lastname@example.org.