Tough Life for Commercial Landlords

Posted by:

Kenton Bazeley

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Kenton Bazeley,

Partner, Head of Litigation

In light of the developing situation with Coronavirus and the most recent update from the Government, Kenton Bazeley, Head of Litigation at Archers Law LLP has written an update for Commercial Landlords. 

The world is changing on a daily basis and the government is seemingly doing whatever it can to keep pace with the changing economy and welfare of the country. 

It is safe to say that the legislative changes that have taken place over the last five days, have been more dramatic in content and fast moving than over the past 5 years, which is saying something when considering that this also included Brexit. 

This is certainly a tough time for all, but it seems that it was tough even before the current Coronavirus outbreak, if we are able to remember what the landscape was like at that point. 

Dixons Carphone has confirmed that it will close all of its 531 standalone Carphone Warehouse stores.  Laura Ashley has also announced the closure of 70 stores nationwide as it streamlines to try to find a suitor. This will come as a massive blow to the numerous Landlords of both household names. Both have said that the actions taken are not as a direct result of the Coronavirus outbreak, yet clearly “the straw that broke the camel’s back”.  

The government has unleashed a host of protective measures to assist businesses in the time of unprecedented trouble, with a view to propping up the economy; pending the covalence of the population. To do this the Government has proposed amendments to the Coronavirus Bill which would prevent Landlords from exercising rights to forfeit Leases due to non-payment of rent as they would normally be able to do.

This will be a welcome relief for tenants (and a headache for Landlords) but it should be noted that that the legislation proposes to simply suspend payments of rent and does not dispense with them. The rent will therefore need to be paid at some point in the future. 

Even before the legislative changes some landlords, keen to keep hold of otherwise good tenants, are coming to arrangements for the payment of rent. 

There are a few other points that need to be borne in mind:

·       The legislation will see that the period in which no forfeiture action can be taken for the non- payment of rent, is suspended until 30 June 2020;

·       Action can be taken for all breaches of the lease other than non-payment of rent; 

·       The moratorium only relates to rent and does not include service charges or other expenses paid by the Landlord on behalf of the tenants;

·       The legislation cannot be relied upon to prove that the Landlord has waived the right to forfeit as some point in the future. 

Notwithstanding the legislative revolution, there is bound to be more to come. 

For more information on this, Archers Law are on hand to help through this difficult time. All of our contact numbers can be found here

Disclaimer: The information contained in this article is for general information only and made available for educational purposes only.  It is for a general understanding of the law, not to provide specific legal advice.  This article should not be used as a substitute for competent legal advice from a regulated professional.  You should seek appropriate legal advice for your own situation.