Commercial Landlords- securing rent recovery (through the Covid-19 pandemic)

Businesses are being hit hard by the pandemic which resulted in a number of businesses being forced to close their doors, stop trading and subsequently having insufficient funds to pay rent.

The Government put in place a number of measures to give commercial tenants some breathing space and it is important that commercial landlords understand what they can and can’t do in relation to such non-payment of rent during the pandemic (currently up to 30 June 2020) and we have set out a brief summary to assist.

Commercial landlords and tenants must remember that the rent under the lease remains payable at all times.

CAN

  • Issue rent demands and reminders (if there any other breaches of the lease, you should not demand or accept rent, as by doing so, could amount to a waiver of the right to forfeit)
  • Utilise any rent deposit held- you must check the terms of the lease/ rent deposit deed
  • Issue Court proceedings for recovery of rent by way of a debt claim, mesne profits or damages
  • Claim against guarantors
  • Exercise commercial rent arrears recovery (CRAR)- provided that at least 90 days’ rent is outstanding
  • Serve a statutory demand (however the Government has announced its intention to ban the use of statutory demands and winding up petitions and we are awaiting further details which is likely to come into force at the end of May 2020)

CANNOT

  • Exercise the right of re-entry/ forfeiture
  • Use non-payment of rent between 26 March 2020 and 30 June 2020 as a reason to oppose the renewal of a business lease

SHOULD

  • Speak to your tenant as soon as there is a default in the rent payment
  • Ask the tenant to consider the various loans/ assistance which is available
  • Where applicable, agree a payment plan and consider options such as deferment of rent-care must be taken to ensure that any such agreement is set out in writing to avoid complexities in the future
  • Consider whether you have rent protection insurance

Please note:

  • Possession proceedings and enforcement of any possession orders are currently being stayed for a period up to 90 days
  • There are significant delays in the Courts processing claims and even where a claim is not defended, there may be a delay in landlords securing a Judgment.
  • Landlords should also consider the viability of enforcing a Judgment against the tenant or guarantor and what information is held to assist in the enforcement process.

These are uncertain times and with matters changing and evolving quickly, we are here to help and support you.  Please contact Akanshi Agrawal on 01702 352511 with any queries that you may have.

Author: Akanshi Agrawal

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