The government has extended the prohibition against forfeiture of business tenancies for non-payment of rent until 25 March 2022.
Almost all commercial leases allow the Landlord to re-enter the Property and terminate the lease (“forfeit” it) where the Tenant has failed to pay the rents due or has failed to comply with the terms of the lease or has gone into liquidation or bankruptcy. During the Covid pandemic, many businesses have seen a substantial shortfall in their income and have been unable to pay rent on time. Many have fallen into substantial arrears during this period. In the pre-Covid world, the existence of arrears would have entitled a commercial landlord to forfeit a lease, but (as the law currently) stands, landlords may not bring actions to forfeit business leases for non-payment of rent until 25 March 2022.
Although the current rules do impose other limitations on landlords, it is important to note that this provision restricts the ability of the landlord of a business property to forfeit a business lease for non-payment of rent only. It does not prevent a landlord from forfeiting the lease for any of the other reasons set out in the lease (such as where the tenant has breached the terms of the lease) and it does not prevent the landlord from pursuing other options open to it – including withdrawals from a rent deposit, etc.
Notwithstanding its limitations, the current rule provides a welcome window for commercial tenants. Tenants may wish to use this time to come to an arrangement with their landlords in relation to any existing arrears– the window will not remain open forever.
Speak to our Commercial Real Estate Solicitors in Guildford and London
If you would like any further advice in relation to the options open to landlords or tenants or to discuss arrangements that can be made between landlords and tenants, please contact our Commercial Real Estate Team. Call us on 01483 451900 (Guildford), 020 7421 9421 (London), email us at sols@gordonsols.co.uk or make an online enquiry here.
About the Author
Partner and Commercial Real Estate Solicitor
Tel: 01483 451900
Email:adrian@gordonsols.co.uk