The government extends moratorium on forfeiture of commercial property

Many businesses have taken a toll or even started insolvency procedures due to the coronavirus pandemic and national lockdown restrictions. In order to ease some pressure for business owners, the government put in place a moratorium on forfeiture of commercial property for the non-payment of charges and rent. This moratorium was originally due to expire in June 2020, however, it was then extended twice until 31st December 2020. The government announced they were extending the moratorium once again until 31 March 2021 to continue providing protection for business owners suffering during the pandemic. The government has expressed that this is a final extension and as of 31st March 2021, business-owners will no longer be afforded this protection.

The three-month extension has been provided with the aim that business owners and landlords reach an agreement regarding any outstanding rent. Although this protection seems to favour only business-owners without consideration for landlords, the government has stated that where a business is able to provide full or part payment of their rental obligations they should do so. Nevertheless, commercial landlords have been put in an unfavourable position which will result in further suffering due to the extension of the moratorium. Many commercial landlords who had planned on seizing their properties in the new year have once more been put on hold. Many landlords will be waiting for the final extension to end in order to recover from the losses sustained during the past year.

Additionally, landlords have sustained a further blow after the government also extended the Commercial Rent Arrears Recovery (CRAR) protections in favour of businesses until 31st March 2021. CRAR is a statutory procedure that enables landlords of wholly commercial property to seize and sell tenant’s goods for non-payment of rent. Usually, landlords can enforce CRAR after a tenant has failed to pay rent for 7 days. However, the Coronavirus Act 2020 extended this period to 189 days further straining landlords’ opportunity to recover rent owed.

Furthermore, the government has been proactive in pumping funds into businesses in order to minimise the damage to the British economy caused by the pandemic. The government has outlined how they intend to inject a staggering £280 billion into businesses and employees. Of this sum, £100 million has been segregated for the sole purpose of supporting businesses, the majority of which will be provided in the form of loans.

The government has also promised to review legislation and measures concerning commercial landlords and tenants in the forthcoming year. These facts are correct as at 4th February 2021.

Please contact John Szepietowski at Audley Chaucer for details on this matter or any other legal topic

Larissa Bourgi


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