Hope springs eternal? Last call for commercial tenants to address their debts
It is no surprise to see that the government is intending to extend the ban on the forfeiture of commercial leases until the end of March 2021. This will mean that businesses will have operated for a year by that point without the threat of closure by their landlords.
Given the closures and restrictions which many retail and leisure businesses have experienced as a result of government rules during this time, the announcement may mean very little to such tenants - particularly as many landlords are unlikely to want to take back premises in the current difficult market. Indeed, tenants will probably be more interested to see whether this announcement is followed by any extension of the other restrictions on landlords' remedies. (See https://www.charlesrussellspeechlys.com/en/news-and-insights/insights/real-estate/2020/need-to-know-dealing-with-2020s-september-quarter-day/ for an explanation of the restrictions currently in place.)
Further extensions on these other existing restrictions seem likely, although many landlords and tenants have already agreed revised arrangements for commercial lease rents anyway. However, tenants who have still failed to reach repayment agreements with their landlords should take note that the proposed extension of the forfeiture ban appears to have been referred to as a "final extension". All indications are that parties have a final three months to reach agreement on unpaid rents before "business as usual" resumes in the landlord and tenant relationship.
“We are witnessing a profound adjustment in commercial property. It is critical that landlords and tenants across the country use the coming months to reach agreements on rent wherever possible and enable viable businesses to continue to operate.”
