Insights Commercial Property Law – Key Considerations (November 2021)

Our November 2021 summary of the latest developments in Property law and practice is as follows:

Wales has followed England’s suit and extended the “relevant period” to 25 March 2022. Similarly, the equivalent restriction on forfeiture in Northern Ireland (section 83 of the Coronavirus Act 2020) has been extended to 25 March 2022.

In England, the “relevant period” under section 82 of the Coronavirus Act 2020 was extended to 25 March 2022 in June 2021. Section 82 prevents a landlord from forfeiting a business tenancy for non-payment of rents during the relevant period.

We are still waiting for regulations announced last month, which would ring-fence debt accrued due from March 2020 for those tenants whose businesses were affected by closures imposed by Covid-19 restrictions, to be introduced. It is expected that the forfeiture restrictions imposed under section 82 of the Coronavirus Act 2020 will ease once legislation to ring-fence Covid-19 arrears comes into force.

The Taking Control of Goods (Amendments) (Coronavirus) Regulations 2021 impact the amount of rent that must be unpaid before Commercial Rent Arrears Recovery (CRAR) can be used by landlords. During the “relevant period” under section 82 of the Coronavirus Act 2020, the minimum amount of unpaid rent is the amount equal to 554 days’ rent.

Despite increasing the relevant period under section 82, the government’s decision to not increase the amount of net unpaid rent means that CRAR has become available in certain situations. For example, a tenant who did not pay rent on the usual quarters in March, June, September, December 2020, and further defaulted in March and June 2021, will be over the 554 threshold if they also did not pay on 29 September 2021.

In simple terms, the Government expects tenants to be paying their rents in full now that premises are back open for business and a tenant who skipped six quarters’ rent but who starts to pay again will not have accumulate more than 553 days of arrears.

The Corporate Insolvency and Governance Act 2020 introduced temporary measures to restrict the use of winding-up proceedings against companies and LLPs during the COVID-19 pandemic. Those restrictions have now expired, as of 30 September 2021.

Instead, to help ease businesses back into the full effects of the liquidation regime, new measures have been brought in under the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) (No. 2) Regulations 2021 (SI 2021/1091). The new measures will run until 31 March 2022 and can be summarised as follows:

  • A requirement that the debt owed to the petitioning creditor is £10,000 or more.
  • A new requirement for a petitioning creditor to demonstrate that it has sought to negotiate repayment of a debt, before seeking to wind-up a company. This will involve sending a notice to the company giving it 21 days to respond with proposals for payment of the debt owing.
  • A restriction on petitioning creditors using rent (or any sum or other payment that a tenant is liable to pay) under a “relevant business tenancy” as the basis for presenting a petition, unless the creditor can prove that the non-payment of the debt is not related to the pandemic. Unpaid rents are excluded debts under these regulations, provided they are unpaid “by reason of a financial effect of coronavirus”.