Further Restrictions on CRAR and Forfeiture
This article was published on: 18th September 2020Matt Pugh
On 16 September 2020, the Government announced that it would extend the restrictions on forfeiting commercial leases or using Commercial Rent Arrears Recovery (CRAR).
Those restrictions have now been enshrined in law, but what does this mean for landlords and tenants of business premises?
The Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) (No. 2) Regulations 2020 come into force on 29 September 2020.
Once in force, the “relevant period” in Section 82(12) Coronavirus Act 2020 will be extended to 31 December 2020.
In practice, this means that commercial landlords cannot forfeit a business tenancy for non-payment of rent on or before this date. This covers both forfeiture by proceedings and re-entry.
As our guide for Commercial Landlords explains further, rent continues to fall due and remains payable during this period as per the terms of the lease. Landlords will not be deemed to have waived the right to forfeit unless they do so expressly in writing. It is also still possible to seek to forfeit a business tenancy for other breaches of lease.
The Taking Control of Goods (Amendment) (Coronavirus) Regulations 2020 also come into force on 29 September 2020.
The practical effect of these restrictions is:
- CRAR cannot be exercised on/before 24 December 2020 unless there are at least 276 days of rent outstanding; and
- CRAR cannot be exercised on/after 25 December 2020 unless there are at least 366 days of rent outstanding.
In both cases, the minimum limit applies where action is commenced during “relevant period” i.e. 25 March 2020 to 31 December 2020. For action being taken after the end of the relevant period (i.e. from 1 January 2021) the minimum arrears will reduce back to seven days. This is of course subject to any further changes the Government introduces. These deadlines have already been extended a number times and may well be extended again.
Author: Paul Sagar, Senior Associate
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