Government Extends the Ban on Commercial Landlord Sanctions

A ban on evictions, first introduced in March to protect businesses suffering due to Covid-19, has been extended until the end of the year, it was announced last month.

The commercial rent protection period, intended to give ailing businesses breathing space to recover from losses incurred during lockdown and beyond, means that landlords are barred from evicting their tenants if they cannot pay their rent due to the coronavirus pandemic.

The moratorium on commercial landlord sanctions was initially due to end on 30th June 2020, but was extended for a further three months to September. On 16th September, the Government extended the moratorium again, until the end of 2020. The new statutory instrument came into force on 29th September 2020.

Robert Jenrick, Secretary of State for Housing, Communities and Local Government, said of the extension: “We are extending support to protect those businesses that are unable to pay their rent from eviction to the end of the year. This will stop businesses going under and protect jobs over the coming months.”

What does the moratorium extension mean for landlords?

The extension prevents commercial landlords from forfeiting commercial leases due to rent arrears until the end of 2020. Many landlords worry that this could allow unscrupulous tenants to take advantage of the rent protection period by withholding rent that they are capable of paying. To prevent this, landlords and tenants alike are encouraged to abide by a voluntary Code of Practice for commercial property relationships that was set up in June.

CRAR (Commercial Rent Arrears Recovery)

Under CRAR, landlords can recover rent arrears by repossessing and selling off the tenant’s goods. But the number of days of unpaid rent required to be eligible for CRAR has increased to 276 (if notice is served from now until 24 December 2020), or 366 (if notice is served on or after 25 December 2020). If you meet these criteria, you can take action under the CRAR statutory procedure.

Although landlords cannot currently evict tenants for non-payment of rent unless they meet CRAR stipulations, it’s important to note that rent is still due during the moratorium, and when the rent protection period ends, tenants will be liable for the full amount.

Other ways to repossess commercial property

The Moratorium only prevents evictions due to the failure to pay rent.  If tenants are breaching their commercial leases in other ways, a landlord can give notice under Section 146 of the Law of Property Act 1925 which allows the tenant a reasonable time to correct the breach before further action can be taken. In practice this may prove difficult to enforce – and a ‘reasonable’ period of time may be longer than usual due to the pandemic.

Get legal advice from commercial property experts

Our commercial property solicitors offer legal advice with all aspects of commercial property law. We can help landlords by advising on any legal issues arising from the moratorium extension.

For more information, contact us on 01727 858807.