The Coronavirus Act 2020 (Act) was a piece of emergency legislation brought into force on the 26 March 2020 covering a wide variety of matters including the rules regarding Landlords repossessing their property.
The Act has been designed to protect tenants from eviction and notice periods have therefore been extended to three months. This is during the period from the 26 March 2020 and ends on the 30 September 2020 however the end date may be extended as necessary up to 6 months and may be extended multiple times.
The three months extension is in relation to both section 21 and section 8 notices and updated notice forms should be used for any notices that are served at the current time. Landlords and tenants must be mindful that the “normal” rules for section 8 notices in relation to grounds and when proceedings can be commenced no longer apply.
The provisions under the Act are not retrospective, meaning that they do not apply in relation to any notices prior to the Act coming into force – however, care should be taken as the courts have also set out their own rules (see below) in addition to the Act.
Landlords and tenants should also note that the Act does not restrict a landlord from pursuing a tenant for none payment of rent through an “ordinary” debt claim.
Section 82 of the Act contains specific provisions to protect business tenancies and restrict tenancies from being forfeited during the relevant period, which for commercial leases, is the 26 March 2020 to 30 June 2020 (but this may be extended).
During the Relevant Period (which remember may be extended) the following restrictions will be in force:
– a right if re-entry or forfeiture for non-payment of rent cannot be enforced;
– no conduct that the landlord (or an agent) shall be taken to mean the landlord has waived their right of re-entry for non-payment of rent;
– if High Court proceedings have already been commenced to enforce a right of re-entry or forfeiture for non-payment of rent, any order for possession by the court is to ensure that the tenant does not have to vacate the property prior to the end of the Relevant Period;
– Where the High Court has already made an order for possession to enforce a right of re-entry for non-payment of rent during the Relevant Period then the tenant must take steps to comply with other terms of the order (such as clearing rent arrears) and apply to the court to vary the terms of the order.
– Where county court proceedings have been issued then such an order for possession must not specify a date before the end of the relevant period and where the court has already made an order the date of possession will be extended so that it expires at the end of the Relevant Period.
Section 82 covers relevant business tenancies and advice should be taken to determine whether or not your tenancy is covered as it is likely that a tenant will still be deemed to be in occupation where it is unsafe to be in occupation or occupation is unable do to Covid-19 and applicable restrictions.
It is likely that the following will not be classified as being restricted by section 82:
– a licence;
– a tenancy at will;
– agricultural holdings;
– mining leases;
– service tenancies;
– tenancies for six months or less; and
– farm business tenancies.
Care must be taken by tenants as section 82 is only in relation to non payment of rent and the landlords right to forfeit the lease for non-payment of rent will immediately be restored following the expiry of the Relevant Period.
Landlords are also not restricted from taking any action, including forfeiture, where such action is based on matters arising from anything other than non-payment of rent, such as but not limited to:
– claims for debt, damages or mense profits (through occupation)
– commercial rent arrears (CRAR)
– serving a statutory demand
– claiming against guarantors
– using a rent deposit.
Overall the Act in relation to Commercial Premises is more focused on protecting tenants for not paying rent and the reason for non-payment of rent need not be attributed to Covid-19.
What the Act does not do is state that rent is not payable and therefore tenants should seek to negotiate with landlords and keep up to date with the latest government guidance.
Landlords should also remember that it is not just the Act that has altered repossession rules.
The courts have also had their say on the matter through the Civil Procedure Rule Practice Direction that came into force on the 27 March 2020 for a period of 90 days. The modification states that any claims for possession, whether residential or commercial, and all proceedings seeking to enforcement action are also stayed. The updated practice direction will no longer have effect from the 30 October 2020.
It should be noted that the practice direction only states that proceedings are stayed, which means that proceedings can still be issued but the court will take no action. Additionally, the practice direction does not apply to claims for injunctive relief in relation to trespassers.
Should any Landlords or Tenants require legal advice they should not hesitate to contact our expert litigation team on 0191 4661080 or email@example.com