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Commercial Property and the Coronavirus

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The Government announced on Monday that Commercial tenants who cannot pay their rent because of the coronavirus will be protected from eviction if they miss payments in the next three months.

No right of re-entry or forfeiture for non-payment of rent may be enforced after 26th March 2020 and for existing litigation based on forfeiture for rent arrears, the tenant cannot be evicted until 30th June or such later date as may be announced.

Tenants will still be liable for any rent due, increasing the likelihood of requests for rent reduction, suspension or payment plans. Both landlords and tenants are being advised to take early legal advice before agreeing any changes in rent or the terms of payment of it to avoid disputes in the future.

It is worth noting that a tenant cannot bring a commercial lease to an end as a result of the coronavirus, this can only be done by:

  • Exercising a break clause
  • Negotiating a Surrender of the lease agreed by both parties
  • Serving Notice - if the term of the lease has expired and the tenant is holding over

Commercial Property Solicitor Mike Daly commented:

“Whilst the landscape is changing rapidly and we’ve seen some unprecedented actions by the Government in the last two weeks, both landlords and tenants are still bound by the terms of their leases.

As the main aim of a commercial lease is to secure rental income for the Landlord whilst the tenant secures occupation of the property a lease is a mutual agreement. Some tenants are seeking concessions that are far beyond the protection that the law, as amended, provides. Both parties must be careful not to agree anything without professional advice as such an agreement may have unintended consequences.”

For advice on any commercial property matters please call 01928 735333.