Commercial Tenancies and Protection from eviction

The Government has announced it will be introducing a three month moratorium on landlords of commercial property taking action against their tenants for failure to pay rent. This will apply where a tenant cannot pay rent as a result of the coronavirus.

We expect this will only delay the right for a landlord to forfeit rather than remove it altogether. Therefore, this shouldn’t affect the forfeiture right being exercised or for rent to be recovered following the end of the three month period. However, it may affect the ability to recover rent during the moratorium which may be paid over time (a form of payment plan). We will keep you informed.

This will be welcome news for those businesses which have been forced to close or are facing cash flow difficulties which applies to most businesses.

What is not clear is how this interfaces with the relationship between landlord and lender and whether the lender’s ability to appoint a receiver for non-payment of monies owed by the landlord will mirror the moratorium leaving things effectively in a standstill arrangement.

The Covid19 business interruption loan scheme, which we wrote about yesterday, will help some companies bridge this gap and we advise all eligible to apply for a loan.

Ultimately, as we advised in our article previous article on commercial tenant defaults, it’s good to talk! Landlords and tenants should keep in contact and try to arrange voluntary alternative arrangements for any rent arrears as this could save significant costs as well as assessing whether any of the other Government measures apply to them and could be used to assist.

For more information, please contact Dan Moan or Ollie Grech in our Real Estate & Projects Team.

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