Further Extension of Protection Against Forfeiture of Business Tenancies in Wales
Key Contact: Jennifer Butcher
Author: Emma Poole
When the Coronavirus Act 2020 (“the Act”) came into force in March 2020 it had wide implications for businesses across England and Wales. Not least Section 82 of the Act which provided that landlords of business tenancies in England and Wales could not enforce the rights of re-entry or forfeiture for non-payment of rent during the ‘relevant period’. This period commenced from 26 March 2020 and (following an extension) was due to expire on 30 September 2020.
However, The Business Tenancies (Extension of Protection from Forfeiture etc.) (Wales) (Coronavirus) (No. 2) Regulations 2020 announced by the Government has further extended the relevant period in Wales until 31 December 2020.
Whilst the relevant period has been extended in Wales it is important to note that the current position in England is that protection against forfeiture will no longer have effect after 30 September 2020. However, it will be interesting to see whether it will be confirmed in coming days whether business tenancies in England will also be afforded the same extended protection.
What is protected from forfeiture?
The Act does not only cover non-payment of rent but also any monies the tenant is liable to pay under the relevant business tenancy, such as service charges. Importantly however, despite the existence of s.82 of the Act, rent still falls due on the due date with interest accruing under late payments if provided for under the lease.
Moreover, in the usual circumstances, the landlord’s right to forfeit is ‘waived’ in the event they become aware of the breach by demanding rent/accepting payment for rental arrears. The Act does not prevent a landlord’s right to forfeiture, it simply means that they cannot exercise this right until the end of the relevant period. Landlords of commercial properties in Wales are therefore able to continue collecting rental payments without losing their rights to forfeit the lease after 31 December 2020. They are also still permitted to forfeit a lease for a breach of any other tenant covenant.
By contrast, there has yet to be any extension of the moratorium which prevents commercial landlords in England and Wales presenting a winding up petition which follows a statutory demand served prior to 30 September 2020. This moratorium remains in place until 30 September 2020 following which, without further extension, commercial landlords should be able to present these winding up petitions. For more information or guidance, please contact Jennifer Butcher.