Section 82 – Business tenancies in England and Wales: protection from forfeiture etc
82(1) of the Coronavirus Act 2020 (the “Act”) reads “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.”
A relevant tenancy is defined at 82(12) of the Act which refers to the Landlord and Tenant Act 1954 Act and specifically any tenancy where the property comprised in the tenancy is or includes premises which are occupied by the tenant and are so occupied for a business carried on by him or for those and other purposes.
This drafting affords protection for all business tenants and not just those who cannot pay due to the lack of resources in connection with COVID-19. This moves away from the original guidance which stated that commercial tenants unable to pay rent because of coronavirus will be protected from eviction. Whilst this may protect SMEs who are having difficulties with cash flow, larger tenants who may be able to continue to pay rent can avoid doing so and potentially prejudice landlords.
“Rent” is also very widely defined in 82(12) of the Act to include “any sum a tenant is liable to pay under a relevant business tenancy.” This drafting extends not only to rent but service charges and insurance rent.
Section 82 only protects against forfeiture and does not affect the landlord’s other remedies nor does it remove the obligation to pay rent. After the relevant period (26 March 2020 to 30 June 2020 (or such later date as may be specified)) the landlord will be able to exercise any right of re-entry or forfeiture.
The Act does provide some protections for the landlord in 82(2) of the Act. No conduct by or on behalf of the landlord (other than express waiver in writing) will waive the landlord’s right for forfeiture for non-payment of rent. After the relevant period expires, landlords will need to act immediately to avoid waiver by affirming the lease, landlords may consider reserving their rights to re-entry and forfeiture in writing to the tenant during the relevant period.
If you are a commercial tenant or landlord and want to discuss your options further please contact Simon Walker or Robert Hurst by email simonw@talbotwalker.co.uk or roberth@talbotwalker.co.uk