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The Impact of Coronavirus on Commercial Properties

Rebecca Cleal, in the commercial property team at law firm, Prettys, has looked at the wording of the Coronavirus Act 2020 to answer some of the most common questions

There is no doubt the impact of the coronavirus on the commercial property market is going to be significant. The government’s decision to close all retail and leisure outlets until further notice leaves both landlords and tenants uncertain where they stand.

Will my premises be covered by the Coronavirus Act?
In terms of commercial premises, the important thing to note is the definition of ‘relevant business tenancy’ is one to which Part 2 of the Landlord and Tenant Act
1954 applies.

Whilst this clearly means that licences or commercial premises which form part of a larger residential lease will not be covered, it is not clear whether this applies to tenancies contracted out of the Landlord and Tenant Act 1954.

We would anticipate that contracted out tenancies would be included in the definition of ‘relevant business tenancy’ on the basis that Part 2 applies to those tenancies in the first instance prior to the contracting out process taking place.

I am a landlord and my tenant hasn’t paid the March quarter rent – I thought they had to pay?
Although the government advice is to close premises, the obligation to pay rent continues under a lease. If a tenant fails to do so, then the landlord is normally able to forfeit or terminate the lease on the basis of that breach, if they so wish. However, the government has announced that there will now be a three month moratorium on any forfeiture actions, with the Coronavirus Act stating that a right of forfeiture “under a relevant business tenancy, for non-payment of rent may not be enforced, by action or otherwise, during the relevant period” - the relevant period here means the period from 25th March until 30th June 2020.

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