Still time to settle commercial property rent arrears - Palmers Solicitors

Still time to settle commercial property rent arrears

Still time to settle commercial property rent arrears

Following the end of the moratorium on business evictions, commercial landlords have confirmed there is still ‘breathing space’ to agree an arrangement for the payment of arrears.

Despite the moratorium coming to an end on 30 June, the “relevant period” for forfeiture due to non-payment of rent in England has been extended until 25 March 2022.

It comes as the Government says that its Code of Practice, published in response to the impacts of COVID-19 on landlords and tenants in the commercial property sector, is intended to reinforce and promote good practice amongst landlord and tenant relationships as they deal with income shocks caused by the pandemic.

The code supports businesses to come together to negotiate affordable rental agreements. It builds upon the discussions already taking place by giving those tenants and landlords affected by the crisis the tools to come to a mutually beneficial agreement and ensuring that best practice becomes common practice.

It is a voluntary code and does not change the underlying legal relationship or lease contracts between landlord and tenant and any guarantor, although both would be anxious to avoid costly legal battles.

Landlords British Land, Landsec and the British Property Federation recently set out their suggestions in response to the Government’s call for evidence on the best way to withdraw or replace measures that have helped high street firms ride out the virus crisis.

While some tenants have already agreed rent holidays or deferrals with landlords during the pandemic, a number have not and had been worried they will not be able to pay the outstanding rent, after suffering months of closures in lockdowns.

Jacqui McGuirk, a Solicitor with Palmers who specialises in Commercial Property law, explained: “While there is literature stating this extension to the moratorium only applies to businesses that had to remain closed until 19 July 2021, such as nightclubs, when considering the legislation (s82 of the CVA 2020) it does not make such a distinction, nor does the Regulation containing the extension (Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) (No 2) Regulations 2021 (SI 2021/732)). This therefore means that the moratorium applies to all business premises.

“It is also important to know that the service of a statutory demand relating to Covid debts has also been extended until 30 September 2021 and, as such, landlords cannot serve a tenant with a demand for the arrears. Additionally, CRAR has been automatically extended.”

Jacqui added: “Under the latest proposal from the property sector, while rents continue to be payable, any arrears from a period of closure could well be ring-fenced and be subject to the new scheme”.

For help and advice on matters relating to the commercial property sector and in particular renegotiating commercial rent, please contact us.