Extension to moratorium on forfeiture and restrictions on landlords’ other  remedies

United KingdomScotland

Along with publication of the new Code of Practice for Commercial Property Relationships during the COVID-19 pandemic on 19 June the government has announced its intention to extend the period of the temporary restrictions on landlords’ remedies for defaulting tenants, including forfeiture, CRAR, statutory demands and winding up petitions to 30 September 2020.

The government has confirmed it is taking steps to extend the time period for:

  • the moratorium on forfeiture of leases from 30 June to 30 September 2020;
  • the use of CRAR unless the equivalent of 189 days unpaid rent is outstanding during the period to 30 September, meaning the use of CRAR will not be available unless there is more than two quarters’ rent outstanding; and
  • amendments to the Corporate Insolvency and Governance Bill, anticipated to become law by the end of June/early July, have been tabled to also extend the proposed temporary restrictions on statutory demands and winding up petitions to 30 September.

Whilst these extensions have been widely anticipated they, at least temporarily, continue to weaken a landlord’s position. This runs the risk of negatively influencing how tenants engage with the new code of practice, where the very purpose of the code is to encourage collaboration and good behaviour. Though, as the ministerial foreword to the Code notes, “these measures cannot last forever”.