Moratorium on forfeiture of commercial leases extended to 30 September 2020

Original moratorium expires on 30 June 2020

We reported on 24 March 2020 that the commercial tenants who could not pay their rent due to the coronavirus pandemic would avoid having their lease forfeited until 30 June 2020.

That became law under the Coronavirus Act 2020 on the 25 March 2020 (Lady Day) Quarter Day, on which many quarterly rents become payable, and the moratorium commenced the following day (26 March 2020).

New moratorium expires on 30 September 2020

On 17 June 2020, English Regulations and Welsh Regulations made, which extend the protections from forfeiture for non-payment of rent for business tenancies in England and Wales to 30 September 2020. It is not co-incidental that the moratorium continues until the day after the 29 September (Michaelmas Day) Quarter Day.

The English Regulations 2020 and Welsh Regulations 2020 come into force on 29 and 30 June 2020 respectively.

Restriction on rights of forfeiture

Section 82 of the Coronavirus Act 2020 (CVA 2020) provides that a right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent may not be enforced, by action or otherwise, during the relevant period.

What happens on 30 September?

Many hospitality businesses will only start to pick up from 4 July 2020 onwards and it is unrealistic to expect them to pay their September 2020 quarter's rent in full, let alone the arrears from the previous 6 months. The voluntary "Code of Practice for commercial property relationships during the COVID-19 pandemic" published by the UK Government has been widely derided as insufficient to protect commercial tenants, particularly those of hospitality and leisure premises, from enforcement measures.