The moratorium on forfeiture for non-payment of rent enacted by the Coronavius Act 2020 ("the Act") provided some immediate relief to tenants as the March quarter day approached (albeit the rent remains due and payable).
However, the drafting of the legislation resulted in some uncertainty as to the extent of its application. Some of these areas have now been clarified by the Ministry of Housing, Communities and Local Government (MHCLG) in response to questions raised by the Property Litigation Association. The key points to note from this for all landlords and tenants are as follows:
- The policy objective is to protect all commercial leases, whether protected by the Landlord and Tenant Act 1954 or not, irrespective of the length of term or the nature of the tenancy (e.g. office, retail, farm business tenancies etc).
- The Act aims to protect commercial leases with someone in occupation (for example, sub-tenants), provided that person is in occupation for the purposes of their business.
- The moratorium extends to payment of any sums that the tenant is required to pay under the terms of the lease, irrespective of whether such sums are reserved as rent or not and whether they fell due prior to the March 2020 quarter day.
- Any forfeiture in breach of the Act will be ineffective, even if a possession order was obtained prior to 26 March 2020, the start date of the moratorium.
- All other methods of debt recovery remain open to landlords but this is being closely monitored and is under review.
- It is still possible to forfeit for non-financial breaches.
This remains an area of law to monitor closely. Whether a landlord or tenant, if you have any questions about action you can take or your rights if such action has been taken or threatened please contact us.