Dear Members
It seems landlords have been getting round government attempts to protect tenants.These loopholes have just been catered for.
The note below from Chamber Ambassador Alan Clark from Carter Clark explains
Dear Nick
Last month, on 24 March 2020, the Chancellor announced that commercial tenants unable to pay rent because of the Coronavirus would be protected from eviction. The Coronavirus Act 2020 (CVA2020) came into force on 25 March 2020 and the protection stopped the automatic forfeiture of a lease due to missed payments of rent up until 30 June 2020.
The Act did not stop landlords from using other measures, including CRAR (Commercial Rent Arrears Recovery) to collect rent in the usual way via an enforcement officer. Under CRAR commercial tenants goods can be seized, providing a 7-day notice has been issued and a certified enforcement office is used to attend the premise.
Other avenues for the enforcement of a debt, including Statutory Demands and Winding Up Petitions, were also not covered by CVA2020. Whilst many landlords have been willing to accept reduced or deferred terms, some have not been so keen.
The Statutory Demand route gives a debtor 21 days to pay the demand and is used to establish the statutory presumption of insolvency. This isn’t long and can be used by aggressive landlords to show they mean business and want their rent. Where a landlord, or any other creditors for that matter, is owed in excess of £750 they are able to present a winding-up petition. The petition will be advertised and credit agencies and banks will become aware, which will cause further problems with banking covenants, credit insurers and suppliers.
Yesterday, 23 April 2020, the Business Secretary announced new measures to protect tenants from aggressive rent collection and closure. Statutory demands and winding up petitions issued to commercial tenants will be temporarily voided and changes are being made to the use of CRAR.
Any petition issued for unpaid rent will first have to be reviewed by the court to determine the basis upon which the petition has been presented. The idea is that if the tenant cannot pay rent due to the Coronavirus, the court will not allow the petition to proceed.
CRAR will be amended so that a landlord can only seek enforcement when 90 days rent is unpaid.
The balancing act continues. Landlords need stable tenants and businesses need trading premises. No doubt both sides will be discussing rent holidays and changes to lease terms.
New restructuring tools are expected shortly, including light-touch Administration, and we will keep you up to date as soon as details are known.
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