Forfeiture moratorium on commercial leases extended to 30 June 2021

The moratorium, which was put in place in March 2020 as a result of the newly emerging coronavirus pandemic, was initially only intended to last for three months, until 30 June 2020, but has since been extended to September 2020, December 2020, and most recently, 31 March 2021.

Disappointment for landlords

The news of the extension will come as a disappointment to landlords, who were told when the moratorium was extended in December that that would be the “final” extension.  That announcement was made at a time when case numbers were slowing and the vaccine was beginning its roll-out. With an end to the pandemic seeming to appear on the horizon and the rate of change since then, the news is not entirely surprising.

Evidence on commercial rents

There is one source of comfort for landlords in this latest statement, however.  The government seems to have learnt its lesson since its last announcement and recognises that the position is too unpredictable to presuppose that the restrictions will be able to lift at the end of June, while seeming to understand that commercial landlords cannot be expected to bear the brunt of that policy forever.

They have therefore announced a call for evidence on commercial rents, inviting landlords, tenants and property professionals to submit their experience of the moratorium and its effects, as well as proposals to navigate the months ahead.

“Phased withdrawal”

Options suggested within the announcement are a “phased withdrawal” of the moratorium, and legislative protections aimed at businesses most impacted by the pandemic.  Indeed, something similar has already been seen in relation to residential evictions, with the rules applying differently depending on the landlord’s reason for giving notice and, where the reason is rent arrears, the level of the arrears.

A similar scheme would seem easily justifiable in relation to commercial premises; it would allow tenants who are only a few months behind on their rent to continue to enjoy protection, while landlords of those tenants who have failed to pay any rent whatsoever since the start of the pandemic, despite all of the government financial support and the lucrative months of relative normality last summer, could finally take their premises back.

No details of how an interested party can contribute to that call to evidence have yet been announced, but it is likely to open shortly and continue until early summer, to give the government time to collate the responses and consider the next steps.  The outcome of that review is expected to be announced in early to mid-June, with any new policy becoming law after the current moratorium expires on 30 June 2021.

*The information set out in this article is correct at the date of publication (16 March, 2021). The effect of coronavirus on businesses is a fast-changing area and so it is important to obtain legal advice to ensure you are properly protected. Visit our Coronavirus (COVID-19) Hub for more Leading Insights.

Contact us

If you have any questions regarding the impact of the Coronavirus upon your business or are seeking up-to-date legal advice on property dispute matters, contact Laura Offer on 01202 294 566 or email [email protected]. Alternatively, contact a member of our Commercial Property team in Bournemouth.