COVID-19 Protections for Commercial Tenants Extended

18 December 2020

Shop_fronts_-_commercial_property

As expected the protections for business tenants brought in by the Coronavirus Act 2020 have been extended, now expiring on 31st March 2021.

The change follows in line with extension announced in England and Wales by the Government.

For tenants this will come as a welcome reprieve to an already fraught trading season. For landlords however, the extension prevents them from exercising their ordinary contractual and statutory rights to seek recovery of premises or to terminate a lease on the basis of non-payment of rent.

It should be re-stated that this does not relieve tenants of their obligation to pay rent and other sums due under their lease. If they can pay rent in this period they ought to do so. Furthermore, there is nothing to prevent a landlord from going to Court to obtain a judgment in respect of unpaid rent or charges. Strategically whether this is worthwhile is questionable and most landlords appear to be holding off.

Although this was not unexpected it is difficult to see any further extensions to this situation, which already take the protection for tenants over the 365 day mark. The announcement by the Government describes this as a ‘final extension’. However, predicting what might happen in 2021 may be a fool’s pursuit.

The advice for both landlords and tenants would be not to wait until the shield is removed to attack or to jump for cover. The parties should use the pending lockdown period to negotiate with each other and achieve realistic outcomes for the future of the premises. For the landlord, seeking re-entry might be an insignificant obstacle from 1st April. However, getting a new tenant will be the challenge that comes thereafter.

Landlord and tenants will have to continue to be creative and flexible if the business model is to survive what will be the most challenging economic year in a generation.

If you have any queries the Debt Recovery or Real Estate team at Carson McDowell would be happy to help.

*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.

Back