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Landlord & Tenant Update

 

Covid 19 measures.

Important update for landlords and tenants – How can we help?

 

If you are a landlord or a tenant (or both) please see the below information

 

If anything in this update is unclear please contact the property or litigation departments using any of our contact emails or telephone numbers

 

 

Practice Direction 51Z of the Civil Procedure Rules update,  effective immediately  governing residential and commercial premises

  • The scope of PD 51Z is wide-ranging: it applies to all possession proceedings brought under CPR Part 55 and all proceedings seeking to enforce a possession order. All such claims are stayed until 25 June 2020. These include:
    1. Claims for possession, be it residential or commercial, brought by:
  • A landlord;
  • A mortgagee, relating to mortgages and charges both legal and equitable;
  • A licensor.

       2. Claims for possession brought against trespassers

  1. Accelerated possession claims of property let on assured shorthold tenancies
  2. Claims for interim possession orders
  3. PD 51Z is intended to apply to relevant possession proceedings that have already been commenced. Existing possession claims will therefore be subject to the 90-day stay. It does not appear that parties need take further action to trigger the stay, such as obtaining an order, as this is done by the PD itself.
  4. PD 51Z does not prevent parties bringing claims for possession under CPR Part 55. Claims can therefore still be issued following 27 March 2020, however they will be subject to the stay, consequently not progressing, until 25 June 2020.

 

Section 82 of the Coronavirus Act

The effect of section 82

  • Under s.82(1), landlords of commercial premises cannot forfeit a lease for non-payment of rent, by peaceable re-entry or action, for the relevant period (which currently runs until 30 June 2020, but is capable of extension). It should be noted that s.82(1) does not affect a landlord’s right to re-enter upon grounds other than non-payment of rent. As the stay in PD 51Z does not affect a landlord’s right to forfeit by peaceable re-entry, they may continue to do so on grounds other than non-payment of rent.
  • ‘Rent’ for the purposes of this Act is defined by s.82(12) as ‘any sum a tenant is liable to pay under a relevant business tenancy’. This is a broad definition and may encompass payments that would not ordinarily be considered as rent.
  • Pursuant to s.82(2), no conduct of the landlord will waive a right of re-entry for non-payment of rent, save giving an express waiver in writing.
  • 82(4) prevents the court making an order requiring a tenant to give the landlord possession for non-payment of rent on a date prior to the end of the relevant period. Where such an order has already been made by the County Court, the date is to be treated as extended to expire at the end of the relevant period. Where such an order has already been made by the High Court, the tenant may apply to vary it. Pursuant to s.82(6), the High Court must ensure, when dealing with any such application, that the tenant is not required to leave the premises before the end of the relevant period.
  • As a result of s.82(11), the Court must disregard a failure to pay rent during the relevant period when assessing whether a tenant has persistently delayed in paying rent under s.30(1)(b) of the Landlord and Tenant Act 1954.

 

Practical Consequences for Commercial Landlords and Tenants

  • Parties are encouraged to cooperate to understand the legal impact of coronavirus on their lease and how best to address any issues that may arise. It would be prescient for landlords and tenants, acting on legal advice, to agree a written plan (with the approval of insurance providers and financial lenders).

Gordons can assist with such written plans.

Issues that could arise include:

  1. Some commercial leases being brought to an end as a result of a force majeure clause or frustration;
  2. Breaches of tenants’ covenants as a result of closure of premises;
  3. Potential claims that either party may wish later down the line to assert against the other.
  4. It is conceivable that courts will, in future, take a more lenient approach to granting relief from forfeiture to commercial tenants who have been impacted by the coronavirus outbreak. This may include:
  5. Not requiring tenants to repay all rent arrears before relief is granted;
  6. Granting tenants a longer period in which to pay rent arrears;
  7. Having greater sympathy for tenants in administration and liquidation as a result of the downturn in business consequent to the lockdown measures.

Please contact us for advice with regard to any of the above.