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Protection from Forfeiture: Coronavirus Act 2020 update

As the emergency legislation, following the outbreak of the coronavirus, has now become an Act of Parliament, Coronavirus Act 2020 (“the Act”), we have summarised how this applies to commercial tenancies and whether a landlord can forfeit a lease for the non-payment of rent.

Although the new legislation provides protection, it does not grant any rental relief for tenants.  Section 82 of the Act does however give protection from forfeiture.

With the closures of businesses following the outbreak of Covid-19 and the unprecedented circumstances both landlords and tenants are in, the Act has been passed to provide assistance and protection.

Within a commercial lease, a landlord is entitled to re-enter the property to gain possession, if there is a period of non-payment of rent. The period will be specified within the lease, generally this is 21 days. Therefore, if a tenant fails to pay the rent in accordance with the lease whether this is formally demanded or not, then on the next working day (subject to the terms of the lease) the landlord can attend the property without giving prior notice and take possession by peaceful re-entering (and changing the locks).

Commercial tenancies are now protected by Section 82 of the Act.

Section 82(1) states: “a right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent may not be enforced, by action or otherwise, during the relevant period.” As a result of this, a commercial landlord cannot forfeit the lease for non-payment of rent during the relevant period, and by complying with the Act does not result in the landlord waiving their rights under the lease.

The relevant period has now begun, as the Act is now in force and will end on 30 June 2020. The relevant period will then be reviewed by the Government and they will decide whether this will need to be extended.

If an order has been obtained by the Court granting the landlord possession of the property, then the landlord will not be able to enforce such order before the end of the relevant period. Similarly, if proceedings are ongoing and an order is made during the relevant period, it cannot be enforced until the period has expired.

This should not result in a tenant intentionally not paying the rent during the relevant period, as there are other types of enforcement action a landlord can carry out.

We can advise you on alternative options to assist both the landlord and tenant. Please contact us on 020 7052 3545 or via email: info@kaurmaxwell.com and we will put you in touch with a specialist member of our team.

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