Wednesday 24th June, 2020
I'm a business owner and can't afford to pay my rent for the business premises, what can my landlord do?
Coronavirus (COVID 19) has had a massive impact on nearly all types of business across the UK. It has brought on a whole new set of challenges for businesses across the Globe. Here in the UK it specifically effected many businesses because they were told to close to the Government guidance.
If you are one of many businesses in the UK that has had to close your business premises, which means that your business has had to shut down too, then you may be experiencing some cash flow problems and may find yourself unable to afford to pay rent for your business premises.
Are landlords able to take action against commercial tenants if they are unable to pay rent?
The likely action landlords decide on taking when a commercial tenant is unable to make timely rent payments is forfeiture, which effectively means to terminate the lease. To ensure this didn't happen to many businesses across the UK, the Government put in measures to protect commercial tenants from eviction during the Coronavirus crisis. The Coronavirus bill included a moratorium on the forfeiture of business tenancies for three months. This supports the business during the Coronavirus crisis by making sure that the landlord is unable to terminate a business tenancy due to non payment of rent until the 30th June 2020.
What does the moratorium state?
A right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent may not be enforced, by action or otherwise, during the relevant period.
This moratorium is only valid for non payment of the tenants rent and it still gives landlords to forfeit the tenancy on other grounds.
What happens once the moratorium ends?
When the moratorium expires, the landlord can then forfeit the lease for the non payment of rent by what is known as peaceful re-admission, this is where the landlord attends the property to empty it and change the locks.
If your landlord chooses the option of forfeiture, then this will bring your lease to an immediate termination.
What other action can a landlord take? Though the proposed moratorium will prevent a landlord enforcing a right to forfeiture, a landlord might still take the following enforcement action:
- Issue proceedings against a commercial tenant for recovery of rent arrears
- Commercial Rent Arrears Recovery (CRAR) to seize goods from the property
- Insolvency proceedings against a commercial tenant due to rent arrears
So what will happen if you are unable to pay your commercial rent?
If your business is in a position where it is going to be hard to make future rent payments then it is best to discuss this with your landlord.
It may be in your landlord's best interest to hold on to their current tenants as the economic impact of coronavirus is undetermined.
If you are a tenant and you are struggling to pay your landlord your business rent then please contact CP Law Associates.