Update on Measures Affecting Property Sector

Landlords and tenants are continuing to struggle as a result of the Covid-19 pandemic. Since March 2020 a range of measures have been introduced to help tenants to weather the storm and avoid losing their premises. This month sees the following developments for the commercial property sector:

Commercial Rent Arrears Recovery (CRAR) – as we mentioned last month, CRAR rights are usually exercisable when there are 7 days’ worth of rent arrears. The government amended this in April to require 90 days’ worth of rent arrears. From 24 June 189 days’ rent must be outstanding, i.e. at least two quarters’ worth of rent. The CRAR documents remain suitable for use, but landlords should note the new requirement for 189 days’ rent arrears.

Corporate Insolvency and Governance Act – when enacted, which is likely to be in late June, this Act will restrict landlords’ ability to issue serve statutory demands and issue winding-up petitions as a means of recovering rent arrears. These restrictions are expected to apply until 30 September. The Property documents will continue to be suitable for use.

Moratorium on forfeiture – in March, the government placed a moratorium on forfeiture proceedings for commercial leases until 30 June. The moratorium has now been extended until 30 September.

New Code of Practice for commercial property relationships during the COVID-19 pandemic – this code of practice has been agreed between the government and many significant bodies in the property sector, including the British Property Federation and the British Retail Consortium. It is a voluntary code which aims to encourage landlords and tenants to work together to keep viable businesses operating during the pandemic. It applies until 24 June 2021. The code of practice is here.