COVID-19 and Commercial Leases

There has been a lot of press commentary recently on the effect of the social restrictions imposed on society in an effort to combat the COVID-19 (Coronavirus) pandemic.

These restrictions have hit the retail, leisure and hospitality sectors particularly hard with restaurants, pubs, clubs and all "non-essential" shops being forced to close for the foreseeable future.

Tenants of commercial premises should be aware that, contrary to popular rumours, the government has not imposed a moratorium on the payment of rents. What the government has instead announced is a temporary postponement of a landlord's ability to forfeit a lease for non-payment of rent. The distinction is perhaps subtle but nonetheless significant.

It should be noted that this postponement applies to the payment of rent only and not to any other breaches of the lease. A landlord will still be entitled to pursue forfeiture for breaches other than for payment of rent in the usual way.

As at the date of this article, the government imposed moratorium will come to an end on 30 June 2020.

The provision therefore does not relieve a commercial tenant's requirement to pay the rent or to pay only a reduced proportion. The rent is still due and payable in full on its due date(s) and landlords will still be able to exercise their forfeiture rights for non-payment of rent after the government imposed moratorium period has lapsed.

It is therefore important for landlords and tenants to come together to agree mutually workable solutions to this unprecedented period of social and economic upheaval. Once agreements have been reached, it is crucial that these are formally documented in writing in order to avoid any misunderstandings further down the line.

Glovers' specialist Commercial Property team would be delighted to assist and advise both landlords and tenants affected by the measures brought into effect by recent Coronavirus legislation. Please do not hesitate to contact Philip Mundy or Paul Jagger for guidance.

Please note that the information contained in this article is provided for general knowledge only.  Specific legal advice should be sought in each instance.