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Government bans eviction of commercial property tenants

03 Apr 2020

Tenants of commercial properties that cannot pay their rent because of the spread of coronavirus will not be evicted under new rules announced last week.

These new measures, included in the emergency Coronavirus Bill currently going through Parliament, will mean no business will be forced out of their premises if they miss a payment in the next three months. Once live, the changes will be in force until 30 June 2020, although that date can be extended. Rent will include any sum that a tenant is liable to pay under a relevant business tenancy.

However, this is not a rental holiday and all commercial tenants will still be liable for the rent.

The proposals relate to tenancies to which Part 2 of the Landlord and Tenant Act 1954 applies, or tenancies to which Part 2 would apply if any relevant occupier were the tenant.

The changes:

  • The landlord’s right to re-enter the property or forfeit the lease if rent isn’t paid is restricted until 30 June 2020 (or later if extended).
  • No conduct by a landlord, other than an express waiver in writing, is to be regarded as waiving a right of re-entry or forfeiture under a relevant business tenancy for non-payment of rent.
  • There are amendments to one of the grounds of opposition to a new tenancy (set out in section 30 (1) of the Act), specifically ground (b) – persistent delay in paying rent. Failure to pay rent during the relevant period (i.e. until 30 June 2020 – or later if extended) will not be taken into account in determining whether ground b is made out. This applies whether the rent was due before or in that period.
  • The proposals also impact on proceedings for possession of commercial premises in the Courts.

The government said it recognised that many landlords and tenants were making voluntary arrangements ahead of the first rent quarter day of 2020 on Wednesday, but that more protection was needed for businesses struggling with cashflow and concerned about eviction.

Coronavirus

Robert Jenrick, the secretary of state for housing, communities and local government, said: “We are providing extra protection for businesses with a ban on eviction for commercial tenants who miss rent payments.

“No business will be forced out of their premises if they miss a payment in the next three months.”

Mike Cherry, chairman of the Federation of Small Businesses, welcomed the move.

He said: “This will give piece of mind to millions of small businesses who are desperately struggling with their cash flow.

“We know sensible conversations between landlords and commercial tenants are taking place – but having this legislative backstop to prevent evictions during the worst of the crisis will provide much needed peace of mind for many small businesses.”

Melanie Leech, chief executive of the British Property Federation, said the eviction ban, which had already been announced for rental homes, would provide additional reassurance for businesses but called for more support for landlords as well.

“Property owners are similarly facing the impacts of coronavirus on their own businesses and will need further support – for example to meet their obligations to their lenders and to the savers and pensioners who rely on the income they generate – if they are going to help as many businesses as possible come through the next few weeks,” she said.

If you are a commercial landlord or tenant, and need help on the above during this difficult time, please contact Sara Malik at sara.malik@hay-kilner.co.uk.