COVID-19: Quarter day and forfeiture – breaking news

Yesterday, I wrote about the dilemma facing corporate occupiers on the eve of tomorrow's Quarter day – whether to pay rent as usual or not – or face the risk of forfeiture.

Last night, the Government announced changes to the law to give commercial tenants breathing space. In summary, they are as follows:

  • Where non-payment of rent enables a landlord to treat a lease as forfeited, that right will not be able to be exercised for the relevant period — commencing on the date of Royal Assent and ending on 30th June 2020 — with a power to extend by statutory instrument if needed.
  • Landlords may not enforce a right of re-entry or forfeiture during the relevant period but are protected from inadvertently waiving the breach. A landlord may, however, expressly waive the breach in writing.
  • The power of the High Court (and County Court) to order forfeiture or possession for non-payment of rent is limited. The court cannot make an order which takes effect before the end of the relevant period.
  • This applies in relation to any proceedings commenced before the relevant period to enforce a right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent.
  • Any order made during the relevant period to the effect that possession of the property comprised in the relevant business tenancy is to be given to the landlord must ensure that the tenant does not have to give possession of the property to the landlord before the end of the relevant period.
  • The tenant’s failure to pay rent during the relevant period is ignored for the purposes of a lease renewal under the Landlord and Tenant Act 1954.

For commercial tenants this will give vital breathing space. For landlords, questions remain around how to manage the rental voids created. Further thoughts to follow in due course.