The Government has announced that safe guards afforded to business tenants introduced by the Coronavirus Act 2020 are to be extended to allow tenants more breathing space to pay rent.
The Government is proposing secondary legislation preventing landlords from using the Commercial Rent Arrears Recovery (CRAR) procedure. CRAR allows a landlord to recover rent arrears relating to commercial property by taking control of the tenant’s goods and selling them in order to pay the arrears. The Government is proposing that CRAR as a method of enforcement will only be available to a landlord where the rent owed by the tenant has been unpaid for 90 days.
Further, the Government proposes to introduce a Corporate Insolvency and Governance Bill. The proposed legislation will temporarily prevent a landlord from using of a Statutory Demand served under the Insolvency Act 1986 as a method for enforcing payment of rent arrears. Under the Government’s proposals, where a winding up petition is presented by the landlord the company’s inability to pay its debts will be reviewed by the Court to determine whether the inability to pay is the result of Covid-19. Where the Court is satisfied that this is the case, the Court will not allow the petition to proceed.
It is proposed that these new measures which are being introduced to reinforce the existing safe guards for commercial tenants in terms of the current moratorium on forfeiture of a business tenancy will be in force until 30 June 2020. The moratorium will be reviewed and extended if necessary.