Business Tenancies and Coronavirus: Rights of re-entry

Thursday 18 June 2020

Our previous blog post, ‘Stay on possession and enforcement proceedings extended to 23rd August’, considered how the current moratorium on possession proceedings brought in the courts under part 55 of the Civil Procedure Rules (CPR 55) was recently extended.

There is however a further possibility which should be considered in respect of business tenancies: whether it is possible for a landlord to take possession by peaceable re-entry (if there has been non-payment of rent and there is an appropriate provision for re-entry in the tenancy)?

Section 82(1) of the Coronavirus Act 2020 (‘the Act’) states that ‘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’.

Section 82(12) of the Act defines the relevant period as being up to ‘30 June 2020 or such later date as may be specified by the relevant national authority in regulations made by statutory instrument (and that power may be exercised on more than one occasion so as to further extend the period)’.

However, unlike the moratorium on possession proceedings under CPR 55, outlined in the previously posted blog, no statutory instrument has been passed extending the relevant period for the purpose of Section 82(1) of the Act. Therefore, as the legislation currently stands, it is open to landlords of a relevant business tenancy, to take possession by re-entry (where appropriate) from 1 July 2020.

Landlords should be mindful that at present Section 82(2) of the Act outlines that ‘during the relevant period, no conduct by or on behalf of a landlord, other than giving 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’.

As such, a landlord should not have been deemed to waive any right of re-entry which may have arisen in the relevant period up until 30 June 2020, unless expressly done so in writing.

As of 1 July 2020, landlords will need to be mindful that no such further protection will be in place and therefore, if the tenant has breached the tenancy in the relevant period, that they will need to choose whether to pursue the right of re-entry or to waive the breach.

If the landlord behaves in a manner which is consistent with the tenancy continuing (such as demanding rent), then they will be deemed to have waived their right to re-entry for the breach in question. It should be noted that this does not preclude a further right of re-entry arising from a new breach.

As such, it does appear that at present commercial landlords should be able to take possession of properties by peaceful re-entry (provided the appropriate conditions are in place and they have not waived the breach) from 1 July 2020.

It would be prudent however to proceed cautiously in this respect, as the fact that Section 82(12)’s definition of the relevant period contains provision for an extension, means that in the author’s opinion, it is likely that such an extension will be enacted at some stage prior to 30 June 2020.

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Update – Friday 19 June 2020

Further to the blog post above, the Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) Regulations 2020 have now been enacted extending the relevant period for protection for business tenancies until 30 September 2020.

As such, commercial landlords are unable to take possession by peaceful re-entry until 1 October 2020 at the earliest (and this is again subject to any further extension being granted by the Secretary of State).