Forfeiture of lease – Protection for tenants (COVID-19)
In order to protect tenants the UK Government changed a well-known Landlord and Tenant law.
The easiest way for a landlord to get rent out of their tenant who hasn’t paid is to “change the locks at the property”. This is officially known as forfeiture for non-payment of rent. This is a pure real estate right – it doesn’t apply to other commercial contracts. It is generally effective as no business owner wants staff to turn up to their office on Monday more to find the locks have been changed. Even more so for customers of a retail store!
In light of the coronavirus the Government changed the law so that landlords are prevented from changing the locks and forfeiting until the end of June. That is in recognition of the fact that shops are shut and office workers are being told to work from home (WFH).
So Landlords can’t forfeit for now (note this is not a rent holiday – just a delay in landlords enforcing payment).
Whilst this sounds like good news to tenants the UK Government has NOT changed another law which landlords can use – winding up.
A landlord can “wind up” a company if it does not pay an undisputed debt. Rent is an undisputed debt.
Landlords can just apply to court to do this but most may serve a statutory demand to be safe (it buys them some protection). You would get a statutory demand to the company’s registered office.
If that sounds contradictory; it is – and many of my clients agree. It is a shame that the UK Government hasn’t called a moratorium (ie a stop) on UK company involuntary insolvency but it hasn’t.
So what should you do?
I recommend talking to your landlord first – they are expecting the call I assure you. Ask for a rent free. Or maybe half rent for 3 months to take you over the worst period. Failing that trying for monthly rents for the next 12 months – or until the end of the lease.
It is a negotiation done in good faith – you have some law on your side but not all law.
Whatever you “agree” though make sure you email an agreement and get them to confirm.
If you need further assistance you can always call us on 020 8349 5504 or send an email and we will do our best to help.