Last month we reported on Reactivation Notices. That is, the process for ‘reactivating’ residential possession claims automatically stayed under the Coronavirus amendments to the Civil Procedure Rules 2020.
This month we are discussing the Prime Minister’s announcement of lockdown number 2, from 5 November to 2 December, which required most businesses to close and the affect this has had on enforcement action against tenants.
Acting for Commercial Landlords and Tenants we are well aware of the difficulties that the current Covid19 pandemic is putting on both sides of the Landlord and Tenant relationship. To support the businesses affected by the government lockdown, grants were made available, dependent upon the rateable value of the property:
- Grants of £1,334.00 per month are available where the rateable value is £15,000.00 or -under.
- Grants of £2,000.00 per month are available where the rateable value is between £15,000.00 to £51,000.00.
- Grants of £3,000.00 per month are available where the rateable value is over £51,000.00.
Many tenants that were forced to close are approaching landlords to ask for rent holidays. Landlords in turn are either seeking payment of rent or engaging with their tenants to agree rent deferment – rather than a simple holiday. In most cases the Landlord would want to get paid down the line if the tenant is unable to pay at present.
Each case is different and it is a commercial decision to be made by the landlord. Some landlords are more willing to work with tenants than others, whilst tenants also have to bear in mind that the landlords often have their own borrowings and liabilities to take into account. We find that the vast majority of landlords and tenants are willing to work with each other. In the instance where tenants receive a grant, the benefit may be shared. Unfortunately, businesses to whom grants are not available may struggle to pay rent where they are being forced to comply with government restrictions and the effects are felt on both sides.
On 15 September 2020, the Taking Control of Goods (Amendment) (Coronavirus) Regulations 2020 (SI 2020/1002) (Regulations) were made and came into force on 29 September 2020. These are yet another set of regulations relating to the exercise of commercial rent arrears recovery (CRAR), the aim of which is to protect tenants of commercial leases with arrears accumulated during the Covid19 pandemic while protections from forfeiture for business tenancies are in place under the Coronavirus Act 2020 (CVA 2020). The latest rules mean that landlords are severely restricted in the actions they can take to recover arrears from tenants. At present CRAR may only be used where arrears are significant. Current guidance states that from 29 September 2020 until 24 December 2020 (inclusive), 276 days’ rent must be outstanding for CRAR to be permissible.
The right honourable Robert Buckland QC, Lord Chancellor and Secretary of State for Justice has issued a letter to the Certificated Enforcement Agents Association providing guidance to their agents taking control of goods of commercial premises during the operation of the lockdown restrictions. In the letter the Lord Chancellor requests that enforcement agents do not enter properties in England for the purposes of enforcement by taking control of goods, while the restrictions are in force. Enforcement agents should also continue to comply with the government’s Covid secure guidance for enforcement agents.
The Lord Chancellor’s letter, although written in the spirit of lockdown, may have found itself open to Judicial Review based on the legality of his instruction to the enforcement agents. So, it is no surprise that hot off the press are the Public Health (Coronavirus) (Protection from Eviction and Taking Control of goods) (England) Regulations 2020. These regulations came into force on Monday 16 November and reflect the ever changing front line of property litigation.
The current restrictions will have a significant effect on a landlord’s ability to recover rent arrears from tenants. This is a very tricky area with no sign of letting up.
If you are a landlord or a tenant encountering difficulties in the current Covid19 restrictions then please contact our Commercial Property Team on 0114 272 9721.