In March 2020, the Government passed the Coronavirus Act 2020 which provides various emergency measures to help support the UK’s response to the COVID-19 pandemic. Amongst these, was a ban on forfeiture of leases which was imposed from 25 March 2020 to originally 30 June 2020; preventing landlords forfeiting (terminating) a lease due to non-payment of rent.
The Government has since extended this ban on forfeiture to 30 September 2020 and prepared a Code of Practice to govern landlord/tenant relationships during COVID-19 pandemic, which was published on 19 June 2020. This is a voluntary code and does not change the underlying legal relationship or lease agreements, however, it does outline what the Government (having consulted with industry bodies) recommends to be best practice. The full guidance can be found on the Government’s website.
A few of the key points to note include:
- when tenants are seeking concessions, they should provide transparent explanations, supported by financial information of their business. The same principle of transparency and explanation should also be provided by landlords when rejecting the tenant’s request for concession;
- in considering tenant’s request for renegotiation of rent, landlords may wish to consider factors such as:
- duration of closure period;
- effect on trading extra costs to adhere to social distancing requirements; and
- any government support available and tenant’s past track record.
- there is also guidance and examples of arrangements which can be entered into between the landlord and the tenant. It is important to note that these are merely suggestions and, therefore, the parties are not obliged to follow these:
- rent-free period;
- deferral of rent;
- rent variations to reflect current market rate, or rent adjusted to align with turnover;
- landlords accessing the rent deposit during periods where the tenant requires a rent reduction, to be topped up later on; and
- disapply default interest, and others.
- reduce service charge to align with the lack of use of the premises. It is encouraged that landlords pass on any savings to the tenants.
These are only a few key points to consider and we strongly recommend that you take legal advice before you take any action or enter into any agreement, be that as a landlord or tenant.
If you are unsure of your position as a landlord or a tenant or need further information about the ban on forfeiture, then please do not hesitate to get in touch with us on 01323 407555.
SO Legal Solicitors Eastbourne – 01323 407555
SO Legal Solicitors Brighton & Hove – 01273 069920
SO Legal Solicitors Hastings – 01424 709050
SO Legal Solicitors Uckfield – 01825 729840
SO Legal Solicitors Notting Hill – 0203 9677700