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Commercial Tenants Protected from Eviction and Enforcement Action Until the End of 2020

 

 

 

Josie Francis – Paralegal

It is no secret that, amid COVID-19, businesses have struggled and have faced the challenge of stretching their cash to its absolute limit. Many businesses have been forced to choose between missing rent payments or making job cuts and, in extreme circumstances, even both.

In a bid to save businesses, the Ministry of Housing, Communities and Local Government has recently announced an extension of support to prevent commercial tenants from being evicted until the end of 2020. This support will not only protect businesses from eviction but also protect jobs and provide security in these unprecedented times. The eviction ban is in addition to the £160 billion support package already in place for businesses that have been struggling during the pandemic.

The restriction on landlords using Commercial Rents Arrears Recovery (CRAR), to enforce unpaid rent due on commercial leases, will also be extended until the end of 2020. The CRAR enables a landlord to take enforcement action once a tenant has reached a minimum amount of unpaid rent. Once the tenant reaches the minimum, the landlord can serve a notice of enforcement ordering payment. If the arrears remain unpaid, the landlord then has the right to instruct an enforcement agent to seize the tenant’s goods. 

The new 2020 Regulations increase the minimum amount of unpaid rent to be due under CRAR. Now, to exercise CRAR, 276 days’ rent must be outstanding where the notice is served on or before 24 December 2020. This rises to 366 days’ where the notice is served on or before 25 December 2020.

Guidance from the government has made it clear that the support is only available to those genuinely struggling to pay rent. The support is not to be taken advantage of and landlords and tenants should continue to communicate, work together and try to agree individual rent payment arrangements.

Whilst the recent developments come at the expense of landlords, they certainly provide an additional lifeline for businesses desperately trying to get back on their feet and recover from the economic crisis caused by COVID-19. 

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