Coronavirus Act 2020 – March Update for Landlords and Tenants
12 March 2021
Debt Recovery & Insolvency
Housing Secretary Robert Jennick announced on 10 March 2021 that business owners – many of whom have had to cease trading entirely during lockdown – are being given extra support after the Government has extended the ban on commercial evictions for the non-payment of rent for a further 3 months. The last extension had been due to expire on 31 March 2021. The moratorium on commercial forfeiture does not apply to breaches of other tenant covenants and arguably may not extend to the requirement to pay unliquidated amounts such as damages for dilapidations.
Residential tenants will also be supported as the ban on bailiff-enforced evictions in all but the most serious circumstances – such as incidents of fraud or domestic abuse – and the requirement for landlords to provide 6-month notice periods to tenants before they evict will also be extended until at least 31 May.
The Ministry of Justice will also lay a Statutory Instrument to extend the restriction on the use of the Commercial Rent Arrears Recovery (CRAR) process by landlords. This measure will increase the total number of days’ outstanding rent required for CRAR to be used to 457 days’ between 25 March and 23 June, and 554 days’ between the 24 and 30 June. This measure will continue to provide protection to tenants of commercial leases with rent arrears accumulated during the Coronavirus period, while protections from forfeiture for business tenancies are in place under the Coronavirus Act 2020.
It is likely that in line with previous extensions that similar measures in Northern Ireland will follow suit.
The Government’s current position is to support commercial landlords and tenants to agree their own arrangements for paying or writing off rent debts by 30 June. This is supported by the code of conduct published by the Government last year, setting out best practice for these negotiations. But, if these discussions do not happen and there remains a significant risk to jobs, the Government is also prepared to take further steps.
The Government is therefore launching a call for evidence on commercial rents to help monitor the overall progress of negotiations between tenants and landlords. The call for evidence will also set out potential steps that government could take after 30 June, ranging from a phased withdrawal of current protections to legislative options targeted at those businesses most impacted by COVID-19. It states that it would welcome feedback to this call for evidence.
Given the past extensions it would seem likely that some of the temporary COVID-19 measures within the Corporate Insolvency and Governance Act 2020 (CIGA), set to expire on 31 March 2021, may also be extended. Those measures placed temporary restrictions on winding-up petitions and statutory demands.
In addition to the above in Northern Ireland the latest Bankruptcy & Companies Masters’ Court Guidance dated 4 February 2021 states that the restriction in presenting creditors’ bankruptcy or winding-up petitions continues and is unlikely to be removed in the short term. That guidance also strongly encourages creditors to consider alternative methods of debt collection at this time.
If you or your business is affected by any of these issues or require assistance please contact our Debt Recovery & Insolvency team to discuss.