Residential possession pre and post pandemic
A useful overview of the routes available to landlords to obtain possession of residential property both pre and post the COVID-19 pandemic.Read more
The Government has announced on 16 June 2021 in the House of Commons that the restrictions on commercial possession proceedings for rent arrears which have been in place since 25 March 2020 will be extended to 25 March 2022.
It is not yet clear, as the legislation has yet to be made publicly available, exactly what restrictions are intended to remain in place and if it is intended that the restrictions will remain in place as currently in force until 2022, or whether there will be any relaxation or caveats as has been seen in residential possession matters.
In his statement to the House of Commons, Chief Secretary to the Treasury Stephen Barclay stated that he believes the extension of the policy “strikes the right balance between protecting landlords and supporting those businesses that are most in need”. He also said, “We will introduce legislation in this parliamentary session to establish a backstop so that, where commercial negotiations between tenants and landlords are not successful, tenants and landlords go into binding arbitration”
Based on this statement, the new legislation appears to be introducing further mechanisms for commercial landlords to recover rent arrears through binding arbitration. The statement provided does not appear to provide any details in respect of uncooperative tenants or tenants who could pay but refuse to.
Whilst further clarity is awaited in the coming days, we have set out below a brief reminder of the possession process for commercial landlords pre and post (or almost post) pandemic.
Prior to the pandemic, there were numerous options available for commercial landlords to take possession of their premises when a tenant was in breach of their lease, or to recover sums due under the lease. These included:
This list is not exhaustive and our ‘Commercial rent arrears recovery guide’ provides further information in this respect, however, please note this was drafted before the Coronavirus Act 2020 took effect and may not be applicable at the present time.
The introduction of the Coronavirus Act 2020 in March 2020 provided a number of restrictions on the actions that commercial landlords could take. Briefly, these included the following:
Following numerous extensions, the above restrictions were due to end on 30 June 2021. This is now to be extended to 25 March 2022 (with the restrictions on statutory demands and winding up petitions currently extended to 30 September 2021), giving more uncertainty to commercial landlords who may have been unable to take action against tenants for 24 months.
The recent decision in Commerz Real Investmentgesellschaft mbh (CRI) v TFS Stores Limited (TFS)  EWHC 863 (Ch) may have provided some comfort to landlords by confirming that the contractual relationship between the landlord and tenant is not affected by coronavirus to such an extent that the tenant is not liable for rent during the pandemic and that there is no obligation for the landlord to insure for loss of rent.
Unfortunately, this does not help landlords who are trapped with non-paying tenants, who may, in some circumstances, have simply chosen not to pay rather than can’t pay, safe in the knowledge that the landlord cannot take any action to evict them for some considerable time.
At present, the content and scope of the new legislation is unknown. However, Communities Secretary Robert Jenrick has stated that legislation will be introduced to ringfence rent arrears that have accrued when a business has had to close due to the pandemic. In addition, landlords will be expected to make allowances for the ringfenced rent arrears which are due to the pandemic and effectively share the financial burden with the tenant.
The Government guidance provides that, “The extension applies to all businesses, but the new measures that will be introduced by primary legislation will only cover those impacted by closures. This means that rent debt accumulated before March 2020 and after the date when relevant sector restrictions on trading are lifted, will be actionable by landlords as soon as the tenant protection measures are lifted. The arbitration process will be delivered by private arbitrators but in accordance with guidelines which we will set out in the legislation, and they will have to go through an approval process to prove their impartiality.”
Following a previous extension to the restrictions, the Government put out a call for evidence from commercial landlords and tenants in respect of the rent arrears and the response to this is expected to be published in due course.
The most recent announcement will be devastating for many commercial landlords whilst providing a lifeline for tenants, particularly in the hard-hit retail and hospitality industries. Once further clarity on the extended restrictions is available, this should provide commercial landlords with an understanding of the current position and what steps they can take to in light of the restrictions.
For more information and support in dealing with commercial possessions, call us on 01332 227 591 or complete the form below.
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