A moratorium introduced as a result of the Covid-19 pandemic restricted the options available to commercial landlords seeking to recover unpaid rent from their business tenants – as forfeiture proceedings,Commercial Rent Arrears Recovery (CRAR) and winding-up petitions as a result of non-payment of rent were all subject to restrictions under the Coronavirus Act 2020.
After a number of extensions, this temporary legislation has now expired and so from 25 March 2022, forfeiture and winding-up petitions as a result of non-payment of rent and use of the CRAR procedure, became an option open to commercial landlords again - but only in respect of unprotected rent arrears.
Landlords can now pursue unprotected rent arrears from business tenants, via the following avenues: -
Forfeiture from 26 March 2022, although a grace period given by the lease (usually 14 or 21 days) will still apply for quarterly rent which became due on the 25 March 2022 or any subsequent rental payments that are missed by tenants.
Winding-up petitions from 1 April 2022 - landlords will be able to serve statutory demands on tenants and issue winding-up petitions in respect of undisputed debts of more than £750.
CRAR procedure from 26 March 2022, providing tenants owe a minimum of 7 days rent arrears.
Although landlords will likely be pleased with these developments and the easing of restrictions, landlords should act with caution, considering the following: -
The provision making it impossible for landlords to waive the right to forfeit for non-payment of rent or other arrears other than by an express written waiver ended on 25 March 2022. Therefore, landlords should be alert to the fact that it is again possible to waive the right to forfeit for non-payment of rent or other arrears, from 26 March 2022. Landlords therefore cannot chase rent with impunity if they are looking to make use of the forfeiture procedure.
The position with recovery of protected rent arrears is very different. Protected rent arrears are any arrears that were accrued by businesses subject to enforced closures during the pandemic, during the ‘protected period’. The protected period is from 21 March 2020 to whenever that particular business tenant was no longer subject to government enforced closures. Details as to how landlords can pursue protected rent arrears can be found in our previous blog posts on the Commercial Rent (Coronavirus) Act - part 1 of the 3 part series can be read here.
If you are considering issuing a claim to recover rent arrears (whether protected or not), you can contact us for specialist advice at [email protected].
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.
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If you have any questions relating to this article or have any legal disputes you would like to discuss, please contact the Dispute Resolution team on [email protected]