The Retailer Summer Edition 2021

THE RE TA I L ER

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THE CAT AND MOUSE FOR RETAILERS AND RENT PAYMENTS

Michael Lewis Partner Sherrards Solicitors

T he Coronavirus Act 2020 came into force on 26 March 2020 to provide protection to many aspects of society. One such group are retail tenants on the High Street – Michael Lewis explores the latest position. One of the key features of the Coronavirus Act (“the Act”) legislation, in relation to landlords and tenants are a moratoriumonwind ups, bailiffs and forfeiture. As a recap, forfeiture is when a landlord takes back possession of the premises. Provided there is a forfeiture provision in the lease, a landlord does not need a court order and can simply change the locks. The Act provides a moratorium on forfeiture of commercial leases for non-payment of rent. Rent is defined to include any amount payable under the lease. Thus, this applies to all payments required to be made by a tenant including service charge, insurance payments, utilities etc. The forfeiture moratorium applies as from 26 March 2020 and, after a series of extensions, has nowbeen extended until 25March 2022, or such later date as may be specified. This means that, whilst the moratorium is in place, a landlord will not be able to evict a tenant for non-payment of rent. Many commentators have shown surprise at the length of this extension and no doubt landlords are dismayed.

A landlord also has lost other recovery methods such as sending in the bailiffs to seize goods to the value of the debt. The Commercial Rent Arrears Recovery (CRAR) can only be used where tenants owe at least 544 days’ principal rent. A landlord continues to not have the option of threatening Insolvency. There will be an additional three month extension (from 30 June 2021 until 30 September 2021) on the blanket prohibition on statutory demands and the restriction on winding up petitions based on a company’s ina- bility to pay its debts (unless the creditor has reasonable grounds for believing that either COVID-19 has not had a financial effect on the company or that the circumstances forming the basis of the winding up petition would have occurred even if COVID-19 had not had a financial effect on the company). Arguing that COVID-19 has not had a financial impact on your tenants finances is not an attractive or straightforward argument for landlords. The inability to forfeit, send bailiffs in, or commence the insolvency pro- cess portrays a picture of tenants being in the driving seat and landlords being in an extremelyweak and vulnerable position. However, landlords do have one weapon in their armoury. A less known fact is that there is not protecton in place from stopping a landlord simply suing the tenant for rental arrears.

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