Ashton Legal's Nigel Maguire on the challenges currently faced by commercial landlords
As the economic impact of the pandemic grows, many commercial landlords are struggling to collect rent and enforce their business tenants’ other lease obligations.
While the Government has acted to protect business occupiers by restricting landlords’ rights to take enforcement action, this has left some landlords struggling to meet their own financial obligations and keep the buildings in their portfolios in good repair with a significantly reduced income stream.
Landlords of commercial property have been dealt a double blow.
At the same time that a significant number of business tenants stopped paying rent, landlords’ most effective remedies were blocked.
In normal times, a landlord can often force a commercial tenant to pay up by simply starting the process of forfeiting the tenant’s lease.
Alternatively, the landlord could threaten to push the tenant into insolvency by serving a statutory demand. Neither of these remedies has been available because of a temporary moratorium imposed by the Government, which has now been extended to the end of March 2021.
The government has made it clear that this will be the final extension and that it expects landlords and tenants to use this time to reach agreement on any arrears that have built up.
The Government has stated that tenants who can pay should do so.
In the longer term, we expect to see the commercial landlord and tenant relationship shift more towards partnership, with turnover-based rents encouraging both owner and occupier to focus on the success of the tenant’s business.
For now, landlords need to look at what tools they have left to collect rent and enforce their tenants’ other obligations.
While there are still things a landlord can do to enforce tenant obligations, many of them are subject to some quite technical procedural requirements so we would advise you use a solicitor to guide you through them.
-- Nigel Maguire, specialist commercial property team – 0330 404 0749 or email email@example.com