Rights of Commercial and Residential Landlords and Tenants during the COVID-19 pandemic
The Coronavirus Act 2020
The Coronavirus Act 2020 (CVA 2020) is emergency legislation which came into effect on 26th March 2020 to deal with the unprecedented COVID-19 outbreak.
With self-isolation and social distancing measures in place, this has impacted the position of rent collection for many commercial and residential landlords and tenants in the UK.
On 30th March 2020, Coronavirus (COVID-19) Guidance for Landlords and Tenants was published. The guidance does advise tenants to continue to make rent payments, but if they are experiencing difficulties, they should speak with their landlord at the earliest opportunity.
A tenant`s liability to pay rent remains.
Section 81 and Schedule 29 of the CVA 2020 provides protection to tenants who are unable to pay rent because of the COVID-19.
The statutory notice period to be given by Landlords has now been increased to three months, where the notice is served during the Relevant Period.
This has been defined by the CVA 2020 as commencing from 26th March 2020 until 30th September 2020.
It is only after this period has expired that the landlord can bring possession proceedings to evict the tenant.
The Government has also published the new Practice Direction 51Z. From 27th March 2020, any current possession proceedings (or those proceedings yet be processed) will be suspended for the next 90 days.
This applies to both Section 8 and Section 21 notices under the Housing Act 1988.
In normal circumstances non-payment of rent (usually for 21 days) would be sufficient for the landlord to forfeit the lease or obtain re-entry as per the terms of its written tenancy.
Section 82 of the CVA 2020 now provides commercial tenants with protection from forfeiture or re-entry.
Landlords cannot exercise the right of re-entry or forfeiture during the Relevant Period which is defined as during 26 March to 30th June 2020.
This restriction does not amount to a waiver of a landlord`s right to re-entry or forfeiture, unless the landlord has expressed their waiver in writing to their tenant.
In addition, Section 82 of the CVA 2020 specifies the following provisions for existing possession orders for re-entry or forfeiture for non-payment of rent:
- If proceedings have already commenced, then any possession orders from the Court must make certain that the tenant does not have to give up possession of the property under the Relevant Business Tenancy prior to the end of the Relevant Period.
- If a possession order has been made which requires the tenant to give up possession during the Relevant Period, unless the tenant complies with the requirement given in the order by a certain time within the Relevant Period and the tenant applies to have the order varied, then the court must ensure that the tenant does not have to give up possession of the property before the end of the Relevant Period.
A tenant`s position regarding renewal of their business tenancy is further protected, as section 30(1)(b) of the Landlord and Tenant Act 1954 presents the landlord with the option to not renew the business tenancy on the grounds of non-payment of rent by the tenant.
However Section 82(11) of the CVA 2020 provides that this ground is to be disregarded where the failure to pay any rent due under the tenancy was during the Relevant Period.
The CVA 2020 therefore provides a level of security to residential and commercial tenants to avoid possession proceedings or eviction during the pandemic, whilst landlords may be reassured that this is only a temporary change, and the rules do not prevent rent becoming payable once the Relevant Period ends.
Kiran Manku is a solicitor in the Commercial Property Department
Steve Wengraf is a partner with Rutherfords LLP