Covid-19 Update: Guidance For Landlords and Tenants Explained
The UK Government has introduced emergency legislation which covers a broad range of matters related to the current health pandemic. The Corona Virus Act 2020 sets out new rules for commercial landlords and tenants during the crisis. The measures have been introduced with the intention of protecting the rights of landlords and tenants during this period.
The main takeaway from the Corona Virus Act 2020 in relation to commercial tenancies is that tenants who can not pay their rent as a result of the corona virus will be protected from eviction for the next three months. Importantly, this means that a landlord can not forfeit a lease and take back possession of commercial premises if a tenant fails to pay their rent.
These measures have been put in place until at least 30thJune 2020 and there is an option to extend this period if necessary. Businesses in Northern Ireland will not have to pay rates for the next three months and the issuing of rates bills has been deferred from April until June 2020. This will be welcome news to business owners who may have been anxious about not being able to meet rent payments. Tenants should maintain regular contact with their landlords and discuss the possibility of a short-term rent’s reduction or other concessions.
Tenants should also review their insurance policy to see if they have cover for business interruption and seek advice on whether their losses will be covered. Landlords can now avail of a three-month mortgage payment holiday if their tenants are unable to meet rent payments as a result of the corona virus. It is important to note that the Corona Virus Act 2020 only delays a landlord’s right to forfeiture or re-entry. Landlords can still choose to exercise this right at the end of this period. The government guidelines do not prohibit landlords from charging interest on deferred rent payments. The decision to forego or enforce interest payments at the end of the period will be at the discretion of the landlord. However, developments in this area should be kept under review as changes may be implemented throughout the crisis.
Tenants may also be able to delay completion of a lease that is to be granted pursuant to an existing Agreement for Lease. This will depend on the terms of the Agreement for Lease. If there is a Force Majeure clause within the Agreement for Lease, then this could be invoked to delay completion of the lease given the extraordinary circumstances of the current crisis. A tenant could also rely on frustration of the contract, to do so they would have to prove that the unforeseen event (Corona Virus) prevents the performance of contractual obligations or changes the party’s main purpose for entering into the contract.
Private and Social Tenancies
The Ministry of Housing, Communities and Local Government have issued guidance for landlords and tenants in response to the Corona Virus crisis. The guidance states that tenants should continue to pay rent and comply with the terms of their tenancy agreement. The rent levels agreed in tenancy agreements remain legally due to landlords. Landlords are still able to avail of the three-month mortgage payment holiday. Tenants who are unable to meet rent payments are encouraged to speak to their landlords urgently. The guidance states that landlords should offer support and understanding to tenants who may start to see their income fluctuate. Early discussions between tenants and landlords are encouraged with a view to exploring the possibility of a reduction in rent or arranging a payment plan for any rent arears. Unfortunately for tenants, whether or not the level of rent is reduced or any concessions are made is wholly at the discretion of landlords.
Corona Virus Act 2020
The Corona Virus Act 2020 suspends new evictions from taking place for a three-month period. Therefore, as of the 27th March 2020 any Notices seeking possession will be suspended for a period of 90 days. At the expiry of the three-month period a landlord can not force a tenant to leave their home without a court Order. These measures may be extended or altered as the situation evolves. We will continue to monitor this area and keep you updated. If you are a landlord or tenant and require further advice or information please do not hesitate to contact us.