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Temporary protection from eviction for business tenants that miss rent payments

24 Mar 2020

On 23 March 2020 the Government announced that commercial tenants that are unable to pay their rent because of the ongoing Coronavirus (COVID-19) crisis will be protected from eviction from their business premises.

Many landlords are now being approached by their commercial tenants with requests for help in relation to their rent payments because of cash flow issues that have arisen as a direct result of the Coronavirus crisis. Many landlords and tenants are having conversations about rent reductions, ‘rent holidays’ and changes to payment frequency with a view to alleviating the cash flow difficulties. This is particularly pertinent now, with 25 March the day on which most business tenants will be required to pay their next quarter’s rent in advance.

A large number of the affected businesses would, were it not for the crisis, have strong underlying finances and business models. Many landlords then will wish to help, because they will prefer to help their tenant for a temporary period rather than risk having unlet premises. However, many landlords will be reliant on the rental income to service mortgage payments, so they may be unable or unwilling to help.

The Government is now stepping in to help commercial tenants that find themselves in this position and are worried about eviction.

Measures included in the emergency Coronavirus Bill which is going through Parliament (at the time of writing 24th March 2020) but expected to receive Royal Assent and come into force in the next day or so will mean that no business will be forced out of their premises if they miss a rent payment in the next 3 months. The measures will last until 30th June 2020, but the Government can extend this if required. The law will apply to England, Wales and Northern Ireland.

Our understanding is that commercial tenants will remain liable for the unpaid rent after the 3 month period – this is not a rent free period, but instead a rent deferment. The Government is yet to clarify how it proposes to assist Landlords that do not receive rent when otherwise payable in the next 3 months, their resulting cash flow and mortgage repayment issues, but we are told that the Government is actively monitoring this. When the Government announce their next measures, we will provide an update to you.
We appreciate that this may likely cause concern for Landlords, but it will be a temporary relief to Tenants who are adhering to the Government’s advice and have closed or been forced to curtail their businesses as part of the Government’s strategy to help control the spread of the Coronavirus.