By Lee Quickenden, Associate Legal Executive
As everyone is now aware, the government has imposed further restrictions on the public and we are once again finding ourselves in a form of lockdown similar to that of March 2020.
As per the previous position, the government has acted to protect businesses and residential tenants from facing evictions during unprecedented times. It has also taken steps to protect parties adversely affected by the pandemic in terms of finances. This has, however, been to the detriment in many cases of the landlord, be that commercial, or residential.
At the time of writing, the government has not announced any further restrictions on residential evictions, and the current restrictions on enforcement of a residential possession order are due to expire on 11 January 2021, with the courts still operating as normal. I would suspect this is due to change in the coming days.
In terms of remedies available to seek possession and/or recover rent arrears for commercial landlords, further restrictions were already announced just before the New Year and they are as follows:
• Forfeiture of commercial leases – Section 82 Coronavirus Act 2020 now prevents any forfeiture between 26 March 2020 and 31 March 2021, whether by proceedings or peaceable re-entry, of the vast majority of commercial leases for non-payment of any sums due under the lease. Those sums remain due and only an express waiver will waive the right to forfeit when the restricted period ends.
• Commercial Rent Arrears Recovery (CRAR) – The Taking Control of Goods and Certification of Enforcement Agents (Amendment) (Coronavirus) Regulations 2020 prevented landlords from using CRAR unless an amount of at least 90 days’ rent was due (it had previously been seven days or more). This amount was subsequently increased and is currently at least 276 days' rent but has now increased again to 366 days' rent from 25 December. This restriction also now applies until 31 March 2021.
• Statutory demands and winding-up – The Corporate Insolvency and Governance Act prohibits the presentation of a winding-up petition based on an unsatisfied statutory demand served between 1 March 2020 and 31 March 2021. It is also not possible under the Act to present a winding up petition between 27 April 2020 and 31 March 2021, unless it can be shown that coronavirus has not worsened the debtor's financial position or the debtor could not have paid its debts even if there had been no such worsening of its financial position.
This will come as yet more unwelcome news to many commercial landlords who are now owed significant rental arrears, and there is no guarantee that the restrictions will simply end on 31 March 2021 without further extensions being put in place.
We wait with baited breath for the announcement on residential possession cases but, at the very least, we would expect enforcement of any order to be restricted until 31 March 2021 or beyond.
If you have any questions about this or any other property litigation matter, please call contact John Spence, Partner, on tel: 01892 515022 JS@cooperburnett.com or Lee Quickenden, Associate Legal Executive, on tel: 01892 515022 firstname.lastname@example.org
This blog is not intended as legal advice that can be relied upon and CooperBurnett does not accept any responsibility for the accuracy of its contents.