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Commercial Eviction Ban

June 2021

The moratorium on forfeiture proceedings for commercial leases (for non-payment of rent) is extended until 25 March 2022 in England and 30 September 2021 in Wales.

Commercial Rent Arrears Recovery (CRAR) is a mechanism for landlords to recover rent arrears from tenants. The use of the CRAR regime is also being extended, however, it will remain the case that 554 days’ rent needs to remain unpaid for a landlord to exercise CRAR. Before the current Covid-19 pandemic, these rights are usually exercisable when there are 7 days’ worth of rent arrears.

Corporate Insolvency and Governance Act – this Act temporarily restricts a landlords’ ability to serve statutory demands and issue winding-up petitions as a means of recovering rent arrears which relate to the pandemic. These restrictions have been extended until 30 September 2021.

New Measures

The UK Government has also announced that legislation will be introduced shortly protecting those businesses which have had to remain closed during the pandemic. These new measures will allow businesses to ring-fence rent arrears which have accrued when a business has had to remain closed as a result of the pandemic. Landlords are expected to make allowances for the ring-fenced rent arrears and share the financial impact with their tenants.

Landlords and tenants should come to an agreement on how to handle the money owed either by waiving some of the total amount or agreeing a longer-term repayment plan. If no agreement can be reached, the law will ensure a binding arbitration process will be put in place so that both parties can come to a formal agreement. This will be a legal binding agreement that both parties must adhere to.

The Government has also announced that it will carry out a review of commercial landlord and tenant legislation which will look at the Landlord & Tenant Act 1954 Part II, different models of rent payment and the impact of Coronavirus on the market.

The Welsh Government is considering the position for Wales in the coming months.

The property portfolio will be updated as and when the relevant the legislation is passed.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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