Update: ‘Final’ Commercial Eviction Ban Extension

Thursday 10 December 2020

On Wednesday 9 December 2020 the Government announced that commercial tenants who are unable to pay their rent will now be protected from eviction on the grounds of  non-payment of rent until 31 March 2021.

The ban, set out in section 82(1) of the Coronavirus Act 2020 (the Act), was previously due to expire on 31 December 2020. The latest extension (which the Government says will be the last) means that by the time the restrictions end, they will have been in force for a full year.

Other protections for struggling commercial tenants will  also be extended in line with the ban on evictions meaning that, until the end of March 2021, the restrictions on statutory demands, the presenting of winding up petitions and Commercial Rent Arrears Recovery (CRAR) will remain in place.

What exactly does the eviction ban cover?

Note that this ‘ban on evictions’ covers only forfeiture for non-payment of rent. Rent for these purposes has been confirmed to include any sums due under the lease (such as service charge and/or insurance rent).

However, it does not cover:

• forfeiture for other breaches of the terms of commercial leases;
• opposed lease renewal on any of the statutory grounds (save for on the ground of persistent arrears where the arrears relate to non-payment of sums due since 26 March 2020), in line with the provisions of Part II of the Landlord and Tenant Act 1954;
• trespass proceedings against ‘persons unknown’; and
• possession proceedings relating to residential property (though there are still modified notice periods and procedures in this regard which have been brought in as a result of the Pandemic).

It is also important to note that commercial landlords cannot waiver the right to forfeit for rent arrears accruing from 26 March 2020 up until 31 March 2021 (the Relevant Period) unless they have done so expressly in writing (section 82(2) of the Act).

This means that, as things currently stand, from 1 April 2021 there is nothing preventing landlords from re-entering or issuing forfeiture proceedings where rent arrears have accrued during the Relevant Period.

Landlords will therefore have to decide whether, from 1 April 2021 onwards, they intend to forfeit a lease due to rent arrears and, if they do, tread very carefully and act quickly so as not to waive that right.

It remains to be seen, however, whether the Government will put in place some transitional provisions closer to expiry of the legislation to prevent a barrage of evictions taking place on or shortly after 1 April 2021.

The ban does not prevent landlords from charging interest on arrears in line with the lease provisions, seeking recovery from guarantors or using funds from rent deposits.

What can landlords and tenants do as the restrictions continue?

Landlords and tenants are strongly encouraged to work together to agree payment plans, or similar arrangements, and to seek out Government support where tenants are genuinely struggling to pay the rent.

The previously issued Government Code of Practice for landlords and tenants will, we are told, be updated in the New Year.

A commitment has also been made to review the whole of the law governing commercial leases in view of the impact of Covid-19, including a review of Part II of the Landlord and Tenant Act 1954 which was originally enacted as a response to conditions after the Second World War.

If you would like more advice in relation to a commercial property as the restrictions continue, please contact a member of our specialist Property Disputes team on 0113 207 0000.