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Coronavirus Act 2020: Business Tenancies Restrictions on forfeiture for non-payment of rent

Posted on 7th April 2020

By Laura Smallwood

 

Section 82 of the Coronavirus Act 2020, which came into force on 25th March 2020, restricts the ability of landlords of relevant business premises to enforce a right of re-entry or forfeiture for non-payment of rent.

Definitions (s.82(12)
● The ‘relevant period’ during which the provisions apply is 26th March to 30th June, or such later date as may be specified;
● A ‘relevant business tenancy’ is defined as a tenancy to which Part 2 of the Landlord & Tenant Act 1954 applies, or a tenancy to which Part 2 would apply ‘if any relevant occupier was the tenant’;
● ‘Relevant occupier’ means a person other than the tenant who lawfully occupies premises which are, or form part of, the property comprised in the tenancy.
● ‘Rent’ includes any sum which a tenant is liable to pay under the relevant tenancy.

Suspension of forfeiture for non-payment of rent
During the period 26th March to (currently) 30th June, a right of re-entry or forfeiture for non-payment of rent under a relevant business tenancy ‘may not be enforced, by action or otherwise’ (section 82(1)). Accordingly physical re-entry is also prohibited.

Existing proceedings and orders
Where proceedings for forfeiture for non-payment of rent have been brought before 26th March, a landlord’s ability to recover possession is similarly currently restricted as follows.
In the High Court:
● any order for possession during the relevant period must ensure that the tenant does not have to give up possession before 30th June (s.82(4);
● Where a tenant applies to vary an order which would otherwise require possession to be given up during the relevant period, the court must ensure that the tenant does not have to give up possession before 30th June (ss.82(5) and (6));
and in the County Court:
● The Court may not make an order for possession under s.138(3) of the County Courts Act 1984 to take effect before 30th June (s.82(8);
● Where a possession order made before 26th March or during the relevant period under section 138(3) or (4) of the County Courts Act 1984 would otherwise take effect before 30th June, it is treated as automatically extended so as to expire on that date (ss.82(9) and (10).

Points to Note
● The definition of rent covers all financial obligations under the lease, and so applies to service charges and administrative fees, etc, even if not reserved as rent;
● The concept of waiver is severely curtailed during the relevant period; an express waiver in writing is the only conduct by or on behalf of a landlord to be regarded as waiving a right of re-entry or forfeiture (s.82(2));
● There is no restriction on forfeiture for breaches other than non-payment of rent, or on other remedies which may be available to a landlord;
● Failure to pay rent during the relevant period is to be disregarded for the purpose of determining whether ground (b) in s.30(1) of the 1954 Act (persistent delay in paying rent) has been established in relation to a relevant tenancy (s.82(11);
● Section 82 provides only temporary respite from forfeiture; the tenant’s liability for rent during the relevant period subsists, and vulnerability to forfeiture for non-payment will revive when the relevant period comes to an end.

 

If you require advice, or representation, in a claim relating to land or property you can instruct Laura Smallwood by contacting her clerks on 01483 539131 or emailing them at clerks@guildfordchambers.com

 

Disclaimer

This article has been provided free of charge for information purposes only. Although care is taken to ensure the information is accurate no responsibility is assumed by the author or any member of Guildford Chambers for reliance on the content or the accuracy of such content. The information, and/or commentary, does not constitute legal advice and if you have a legal dispute you should seek advice from a solicitor or barrister about your case. Accordingly, no member of Chambers shall be responsible for any action you take or refrain from taking in reliance of anything in this article or case summary.