Rent recovery what commercial landlords can do during COVID restrictions

In the COVID-19 world significant restraints have been placed on landlords’ ability to recover outstanding rents. We look here at what options landlords retain and what factors landlords should take account of as we approach the March quarter day.

Current Restrictions include:

The restrictions imposed during the Covid-19 crisis on landlords’ remedies for recovery of sums due from tenants include:

• Forfeiture of commercial leases – Section 82 Coronavirus Act 2020 prevents any forfeiture between 26 March 2020 and 31 March 2021, whether by proceedings or peaceable re-entry, of the vast majority of commercial leases for non-payment of any sums due under the lease. Those sums remain due and only an express waiver will waive the right to forfeit when the restricted period ends;
• Stay of all possession proceedings – Practice Direction 51Z stayed all possession proceedings for 90 days from 27 March until 25 June 2020, except claims against persons unknown. This period was initially extended until 23 August and was then further extended until 30 September 2020.

If a landlord has a claim which was issued before 3 August 2020, the landlord must serve a ‘reactivation notice’ in order for the stayed claim to be listed or relisted. If there is already a trial date, the landlord must serve the reactivation notice no later than 42 days before the scheduled hearing date, otherwise the trial will be vacated. There is no standard form for a reactivation notice but it must be in writing and contain certain prescribed information. If no reactivation notice has been served by 30 April 2021, the claim will be automatically stayed.

The practice direction also states that the usual provision that the initial hearing in a possession claim should be within eight weeks of issue of the claim will not apply for the period from 20 September 2020 until 30 July 2021, implying that there will be some delay in progressing such proceedings while the courts deal with the backlog of stayed claims. Reference should be made to the detailed provisions of the practice direction where proceedings are being reactivated.

• Commercial Rent Arrears Recovery (CRAR) – The Taking Control of Goods and Certification of Enforcement Agents (Amendment) (Coronavirus) Regulations 2020 prevented landlords from using CRAR unless an amount of at least 90 days’ rent was due (it had previously been seven days or more). This amount was subsequently increased to at least 366 days’ rent from 25 December. This restriction also applies until 31 March 2021.