An update for commercial landlord and tenants
Last month, section 82 of the Coronavirus Act 2020 was introduced to ban the forfeit of commercial leases until 30 June 2020 for not paying rent (or longer if deemed necessary by government). Our previous updates and explain the background to this provision.
Whilst the ban on forfeiture goes some way in providing protection from eviction to commercial tenants, it does not stop landlords from issuing statutory demand notices and winding up orders, making debt claims or pursuing Commercial Rent Arrears Recovery (CRAR). These threats can be lethal to businesses, particularly with no income and pushing them into insolvency within days.
This issue has caused headlines this week with gym and leisure centre businesses raising concerns of landlords using this loophole to threaten eviction. The Chief Executive of trade body, UKActive reports that a ‘a worrying number have decided to pursue statutory demand notices or winding up orders’ putting ‘2,800 gyms at risk of permanent closure, and 100,000 jobs at stake’.
David Lloyd Leisure, which owns David Lloyd Clubs, is said to have appealed to one landlord to request a waiver of rental payments due on 25 March 2020 until the crisis eases and the government allows its clubs to re-open. The request is said to have been refused immediately and followed by the service of a statutory demand.
Pet store owner, Janine Tozer, also reportedly approached the two separate landlords of her premises in Bath and Frome. She asked to defer payments or pay them half for three months. Both landlords refused her request, saying she is still trading and can rely on government support.
The Department for Business, Energy and Industrial Strategy is urging landlords to act in a socially responsible way, exercising judgement and discretion with their tenants.
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Our Real Estate and Property Litigation teams are highly experienced in advising both commercial landlords and tenants. They are on hand to provide urgent advice about issues raised in this update. Please do get in touch.