The moratorium on forfeiture for rent arrears doesn’t only apply to the rent itself. Within the Bill rent is defined as any sums due under the lease so will also include service charges, insurance rent and any other payments due. This protection however, only relates to rent arrears – if the tenant is in breach of other covenants such as repair or permitted use, the usual steps can be taken to give notice and potentially forfeit the lease. Other remedies such as exercising CRAR (Commercial Rent Arrears Recovery), suing for arrears and taking insolvency proceedings against the Tenant would still appear to be available to the Landlord and remain unaffected by the moratorium.
It is important to highlight that the Bill prevents forfeiture but it doesn’t prevent any other recovery methods for unpaid sums under the lease. The tenant is still liable to pay the rent during this period and will still be liable for these sums after 30 June 2020.
Many tenants may have already failed to pay the March quarter rent payment and should be making sure they are able to pay the sum due at the end of June to avoid forfeiture. Tenants should also be mindful of other lease obligations which should be complied with eg insuring the premises. Failure to do so, could give the landlord an opportunity to forfeit.
We would encourage constructive discussions with tenants to see whether agreement can be reached to not only ease the burden on the tenant but also the landlord’s cashflow. A temporary rent reduction and/or payment plan may be options to consider.
Landlords who have commercial borrowing on properties and depend on rent to fund payments should be contacting lenders as soon as possible with regard to delaying or extending paying terms.
If you are concerned about your legal rights and obligations, what steps you can take to recover unpaid rent, lease variations please contact James Williams or Sat Bhandal on 01926 478008 or 01926 478021 or email: JamesW@moore-tibbits.co.uk or SatB@moore-tibbits.co.uk who can provide advice and guidance to support you through this crisis.
James Williams Sat Bhandal