Impact of Covid-19 on Commercial Property Law and Regulation – July round up

Here is our round-up of the key coronavirus related legislative and regulatory developments in the commercial property sector, during the month of July, that may impact your business. If you have any questions or concerns, please do get in touch with a member of the Property Team.

Extended Restrictions on Forfeiture – As expected, the “relevant period” under section 82 of the Coronavirus Act 2020 has been extended. This is the period during which a landlord is restricted from forfeiting a commercial lease for non-payment of rent, whether by re-entry or court proceedings. Under regulations introduced separately in England, Wales and Northern Ireland, the relevant period is extended to 30 September 2020, thereby extending protection beyond the 29 September quarter day for tenants in England and Wales (or the 1 August quarter day for tenants in Northern Ireland).

Extended Restrictions on CRAR – Also extended in England and Wales are the restrictions imposed in April on the use of the Commercial Rent Arrears Recovery procedure for recovery of rent arrears. Under The Taking Control of Goods and Certification of Enforcement Agents (Amendment) (No. 2) (Coronavirus) Regulations 2020/614, the restriction on the use of CRAR is extended in line with restrictions on forfeiture. It is now the case that, during the “relevant period” under section 82 of the Coronavirus Act 2020 (i.e. until 30 September 2020) the minimum amount of net unpaid rent that must be outstanding before CRAR becomes exercisable is now 189 days’ rent.  A tenant who did not pay rent in advance on the 25 March and 24 June quarter days will owe 188 days’ rent. A tenant who did not pay a monthly advance rent in the months of April through to September (6 months) will owe rent in respect of 183 days.

New Restrictions on Winding up – Last month new restrictions were introduced prohibiting the use of statutory demands and winding up proceedings during the COVID-19 crisis. The provisions were contained in the Corporate Insolvency and Governance Bill. Given the retroactive nature of those aspects of the legislation (applying to petitions lodged since 27 April) these provisions had, in effect, already been applied twice by the High Court in applications for injunctions to restrain the presentation and/or advertising of a winding-up petition.

As originally drafted, the temporary restrictions were to apply until 30 June 2020 or, if later, one month after the legislation comes into force. However, the Corporate Insolvency and Governance Bill received Royal Assent on 25 June 2020 and the temporary restrictions will now apply until 30 September 2020.

Registration of Company Changes – The Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020 (SI 2020/645) are in force from 27 June 2020. These regulations are made pursuant to section 39 of the Corporate Insolvency and Governance Act 2020 which provides the Secretary of State with a temporary power to extend time periods for providing information to the Registrar of Companies. Regulation 18 temporarily amends section 859A(4) of the Companies Act 2006, which sets out the time period for the delivery at Companies House of particulars of a charge created by a company. The time period is ordinarily 21 days beginning with the day after the date of creation of the charge. This time period has been increased to 31 days.

VAT Options to Tax – The extended time period for notifying a VAT option to tax to HMRC will run for a longer temporary period than HMRC first announced. The time limit for notifying an option to tax is normally 30 days from opting to tax. HMRC announced that this was extended to 90 days from the date the decision to opt was made. The extended notification procedure will now apply to all decisions made between 15 February and 31 October 2020.