Landlord and Tenant: Commercial tenants and coronavirus

24 Mar 2020

As the coronavirus pandemic continues to unfold, the government has announced that commercial tenants who miss rent payments will be protected from eviction for three months. The latest measure is part of the government’s unprecedented economic support package for businesses and individuals amidst the coronavirus epidemic in the UK.

The new law, which is currently going through parliament (the Coronavirus Bill) will prevent landlords from commencing eviction proceedings against commercial tenants for non-payment of rent for the next three months. This is particularly topical given that the vast majority of commercial leases require the next quarter’s rent payable in advance on 25 March.

This latest announcement comes after the government introduced similar emergency laws to protect private residential renters last week and several major high street businesses (Burger King, Yo! Sushi and Carluccio’s to name three) have already confirmed that they will not be paying.

The government has stated that it recognises many businesses will be struggling with cash flow and the introduction of this measure will mean that no business will be forced out of its premises if it misses a payment of rent because of coronavirus during the next three months. The measure applies to rent only and therefore additional costs such as service charges and insurance will continue to be payable as normal in accordance with the terms of the lease.

While this latest measure will safeguard commercial tenants from potential eviction proceedings, many landlords and commercial tenants are already having conversations about voluntary arrangements which could include rent reductions, deferrals or holidays.

The government has also said that as commercial tenants will continue to be liable to pay rent after the three month period, it will continue to actively monitor the impact on commercial landlords’ cash flow and continues to be in dialogue with them.

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Linden Talbot

Senior Associate