17 Sep 2020

Section 82 of the Coronavirus Act 2020 prevents landlords from using a right of re-entry to bring a business tenancy to an end on the basis of non-payment of rent during the "relevant period" as defined in the legislation.

Currently this "relevant period" is set to come to an end on the 30 September 2020. The newly published Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) (No. 2) Regulations 2020 has extended this "relevant period" by an extra three months until the 31 December 2020.

This legislation will bring the English position in line with Wales. It should be noted that business tenants in Northern Ireland and Scotland are afforded different protections.

This newly published-legislation means that the extension of protection will be on the same terms as previously i.e a blanket prohibition on forfeiture for non payment of rent; despite the Government having indicated that it was considering a more targeted form of extended restriction, there is no requirement, for example, for tenants or landords to show that non-payment of rent is or is not Covid-19 related to get within or outside the restriction.

Further legislation has also been produced in the form of the Taking Control of Goods (Amendment) (Coronavirus) Regulations 2020. These Regulations extend the existing protection for tenants against Commercial Rent Arrears Recovery (CRAR).

While the current Regulations state that landlords cannot seize goods for non-payment of rent by utilising CRAR unless more than 189 days' rent is in arrears, the new Regulations alter the position substantially.

The new Regulations state that:

  • if a notice of enforcement is given, or where goods are taken control of, on or before the 24 December 2020, then 276 days' rent must be in arrears; and
  • if a notice of enforcement is given, or where goods are taken control of, on or after 25 December 2020, then 366 day's rent must be in arrears.

The practical effect of these changes is to further protect tenants who do not pay the upcoming September and December quarters' rents. However they are expressed to last only for the "relevant period", which has been extended until 31 December 2020; therefore from 1 January 2021, these minimum levels of rent required to be in arrear before CRAR is exercisable will revert back to the (pre-Covid) level of just seven days, unless the relevant period is further extended before the end of the year.

Both changes take effect from the 29 September 2020.