The Coronavirus Act 2020: tenancy enforcement on hold?

The Coronavirus Act 2020 came into force on 25 March 2020.  It implements a series of measures to protect both landlords and tenants. 

Summarised below are some of the key measures affecting business tenancies and residential tenancies.

Business tenants protected from eviction

The Coronavirus Act prevents landlords from forfeiting a business tenancy for non‑payment of rent.  This restriction is in place until 30 June 2020 although this period is likely to be extended. 

The term “Rent” is defined widely by the Act and includes not only the principal rent but also insurance contributions, service charges, and any other payments due under the terms of the lease.

The restriction on forfeiture only applies in relation to non‑payment of rent.  It does not prevent the landlord from taking enforcement action based upon other breaches of the lease (although how realistic it is for such enforcement action to be taken during a period of lockdown is debateable).

The Act only protects tenants from forfeiture action.  It does not create a rent‑free period nor does it remove other enforcement options from the landlord’s armoury.  A landlord is still entitled to:-

• withdraw monies from a tenant’s rent deposit
• add interest to the rental debt in accordance with the interest provisions contained in the lease
• commence proceedings against the tenant (or a guarantor) for the rental debt
• serve a statutory demand and commence insolvency action
• initiate Commercial Rent Arrears Recovery

The question that many landlords will be asking is whether, notwithstanding default by the tenant, forfeiting a lease and recovering possession of the premises is a prudent objective.  Premises will be virtually impossible to re‑let and there will potentially be a liability for business rates.

There may be other options.  It may be worth working with a tenant to navigate through the immediate crisis. You might be able to agree with a tenant that, in return for agreeing a rent reduction or rental holiday, the tenant will extend its contractual term or will remove a break clause.  These are unprecedented times and a less conventional, more creative approach may well pay dividends in the long run.  

Residential tenancy enforcement

The Act has suspended all evictions and repossession action until 30 June 2020. 

The Act has also provided that notice periods for Section 21 and Section 8 Notices are extended to 3 months. 

For landlords who have already issued a Section 21 or Section 8 Notice, those Notices will remain valid but the earliest date that the landlord will be able to push forwards with possession proceedings will be 30 June 2020. 

All parties need to be aware that notwithstanding the suspension of enforcement action, rent will continue to accrue. 

Landlords also need to be aware that they will remain responsible for complying with the repairing covenants contained in their lease. Landlords will need to be particularly aware of the need for any urgent health and safety works.

If you have any questions relating to landlord and tenant matters, please contact Andrew Turner on 01242 586841 or at AET@hughes-paddison.co.uk