A New Era For Commercial Landlords

The Covid pandemic saw a raft of new legislation coming into effect curtailing a Landlord’s ability to forfeit, demand payment and take enforcement action within the protected period.

The restrictions on Landlords’ enforcement options imposed by the Corona Virus Act 2020 (CVA 2020) ended on the 25^th March 2022 and the measures contained Corporate Insolvency and Governance Act 2020 (CIGA 2020) ended on the 31^st March 2022.

Any conduct by a Landlord with the protected period of the CVA 2020, which extends up until the 25^th March 2022 did not amount to a waiver in a Landlord’s ability to take action on the removal of the restrictions. Landlords were actively encouraged to try to make alternative arrangements and enter into agreements with their Tenants to help the parties through the pandemic.

Whilst many Landlords were waiting in the wings for the restrictions to be lifted a new Revised Code was introduced and from 24^th March 2022 the Commercial Rent (Coronavirus) Act 2022 came into force (CRCA).  The introduction of CRCA 2022 has resulted in a further obstacle for Landlords in pursing tenants.  As a side note, it has also prevented the Court from being overrun with claims from 25^th March 2022.

The CRCA 2022 has replaced the Landlord’s eagerly anticipated green light to amber, protecting any rent arrears between the period of 21 March 2020 and ending on 18 July 2021 in England or 7 August 2021 (protected rent) by not only protecting a period of rent arrears.  There is now a new binding arbitration process to resolve claims that accrued and relate to the protected rent period in the event parties had not already reached agreement. This new moratorium will prevent Landlords from exercising their usual remedies whilst the application period for arbitration is open for six months, or longer whilst statutory arbitration (if elected) remain in progress.  However, this only relates to certain ring fenced rent arrears.

The Revised Code supplements CRCA 2022 and is directed at all commercial rent debts, not just those that fall within the protected period and provides guidance on how parties should approach negotiation with the intention of seeking a resolution where able.

Should Landlord’s now wish to forfeit leases, or take any action for rent arrears that fall outside of the protected rent period it is important not to do anything that could be inferred to a be an intention to continue with the Lease as this could technically waive your right to forfeit post 25^th March 2022. Please note that this would include demanding payment and taking payment of any arrears.  In the event demands have been made since 25^th March 2022 for unprotected debts would be restricted in claiming the rent arrears only and could stopped from forfeiting unless a fresh breach occurs in which to act on.

It is advisable to seek further advice before attempting to forfeit commercial premises, as there are some exceptions and it may be that the new arbitration process and restrictions bite to some or all of your arrears.  Clarification and the right assistance is important in the current climate to avoid the risks of getting embroiled in any unnecessary and avoidable cross claims against you.

Wilson Browne has a designated team of commercial property litigators who would be happy to assist with any queries and guide you through the process of this new era.