Landlord's Remedies for non-payment of rent - July 2021

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23 July, 2021

We are expecting legislation to introduce Arbitration for Landlords and Tenants and for the
ring fencing of 'COVID' arrears.

The CIGB introduces a moratorium which will provide a breathing space for eligible companies to
allow them to enter into negotiations with creditors and will restrict filings for insolvency
proceedings and enforcement and legal proceedings, and the enforcement of security during that
period.

The Coronavirus Act 2020 has suspended forfeiture action.

Landlord's still have some available remedies to fall back on.


Forfeiture - The Landlord takes back possession of the premises by court proceedings or by
peaceable re-entry i.e., by instructing bailiffs to change the locks. For Landlords this is suspended
under the Coronavirus Act 2020 from 26 March until 30 September. It has since been extended
until 25 March 2022.


CRAR (Commercial Rent Arrears Recovery) - The Landlord instructs an enforcement agent to
serve notice, enter the premises, take control of a tenant's goods and sell them to recover the
value of the rent arrears (normally available if 7 days' rent owing). This is not available to
Landlords until after 25 March 2022.


Court Proceedings - Proceedings are issued at Court for the debt - but judgment will still need to
be enforced once obtained. This is still available to the Landlord. This will not be available for a
tenant who is granted a moratorium under the CIGB.


Statutory Demand - A statutory demand is a written demand for payment of a debt and can be
served for rent arrears of at least £750 (company tenant) or £5,000 (individual tenant) - failure to
pay is used to establish insolvency for a winding-up petition to be presented.

CIGB prohibits statutory demands from being issued on the grounds of rent arrears until 25 September 2021 or such other extended period.

Winding-up petition - A winding-up petition is a court application for a debtor to be put into
compulsory liquidation on the grounds that it is unable to pay its debts. These are possible at the
moment BUT not on the basis of a statutory demand. The Landlord can only use this if the landlord believes EITHER that coronavirus has not had a financial effect on the company OR that the company would have been unable to pay its debts irrespective of the financial effect of coronavirus.

This runs until 25 September 2021 or such other extended period.

Rent deposit - A rent deposit may be taken when the lease is granted as protection against
default - landlord can draw down from this if rent is unpaid. This is available to the Landlord, but
the Landlord may not wish to use this so that they can rely on the arrears once the restrictions are
lifted. We advise caution.


Recover from Guarantor - Third parties may have indemnified the tenant's liabilities, either as
guarantor under the lease, or by being a former tenant ("old lease" or AGA). Former tenants must
be served with a s.17 notice under the (Landlord and Tenant (Covenants) Act 1995) within 6
months of the debt arising. There are no restrictions on this. We advise that you issue a notice to any guarantor/previous tenant immediately to avoid that claim being time barred. The downside is that the previous tenant has a right to request an overriding lease. Fast and specialist legal advice is crucial here.

Negotiating a surrender - If the landlord's aim is to get the property back and let it out to a better
tenant (especially where there are slow-moving renewal proceedings) offering a deal on the
arrears in return for a surrender of the lease can be a useful tool.

For more information contact Laura Hallett Lea in our Dispute Resolution department via email or phone on 0333 207 1141. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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