Articles from the Silver Shemmings Ash Team on contractual matters, recent case law changes and items of interest in the construction and property world
December 15, 2020 | Silver Shemmings
The Coronavirus Act 2020 (CVA 2020), passed as an emergency measure in response to the Pandemic, came into force on 26 March 2020. This legislation together with the introduction of additional Court Procedural Rules (CPR) and other legislation has had a significant impact on landlords of both residential and commercial premises, in that it hinders a landlord’s right to recover possession of its asset for non-payment of rent.
Some potential issues for landlords are set out below however case specific legal advice should always be obtained before commencing any action.
Sections 82(1) to (12) and 83 of the CVA 2020 restrict a commercial landlord’s ability to forfeit and/or exercise its right to re-entry for non-payment of rent during ‘the relevant period’. The relevant period was originally 3 months from 26 March 2020 however this moratorium has recently been extended to 31 December 2020 and may be further extended.
Thus a landlord may not enforce a right of re-entry or forfeiture for non-payment of rent, by action or otherwise until 1 January 2021 at the earliest. It should be noted that pursuant to CVA 2020 landlords can continue to demand rent and and deal with requests for consent without waiving the right to forfeit for non -payment of rent. Forfeiture by way of peaceable re-entry would still be exercisable for breaches other than non-payment of rent and/or other monies due and the usual rules re waiver would then apply.
Other options for rent recovery are similarly stymied, pursuant to the Corporate Governance and Insolvency Act 2020 a temporary halt has been imposed on statutory demands and winding up positions until 31 December 2020 and in the case of Commercial Rent Arrears Recovery (CRAR) the current minimum net unpaid rent required before one can exercise CRAR in England and Wales is 275 days rent this will increase to 366 days on 25 December 2020.
Section 81 CVA 2020 provides protections from eviction by extending notice periods. In the case of an Assured Shorthold Tenancy (AST) (Schedule 29, CVA 2020) the notice period for a notice served by a landlord under Section 8 (previously 2 weeks) and Section 21 (previously 2 months) for non-payment of rent was initially increased to 3 months and, since 29 August 2020, to 6 months. This will apply to most residential tenancies in England until 31 March 2021 except in certain serious cases involving antisocial behaviour etc.
In addition CPR Practice Direction (PD) 51Z which came into force on 27 March 2020 and continued until 27 June 2020, operated so as to stay most possession proceedings brought pursuant to CPR Part 55 and most proceedings for enforcement of a possession order. CPR 55.29 extended the stay on bringing proceedings until 20 September 2020. It should be noted that the stay did not apply to possession proceedings for trespass.
A new CPR PD 55C came into force on 23 August 2020 and will remain in force until 28 March 2021. This new rule means that there will no longer be an automatic stay imposed on Part 55 possession claims. However possession claims brought before 3 August 2020 will remain stayed unless/until a party files a ‘reactivation notice’. A ‘reactivation notice’ is also required where case management directions have been made before 23 August 2020 or a trial date had been set before 27 March 2020 (a ‘reactivation notice’ must be served 42 days before the hearing date or the date will be vacated). It is important to note that if no ‘reactivation notice’ is ﬁled before 29 January 2021, the claim will be automatically stayed and it will be necessary to make an application to court in order to lift the stay.
In addition the Protection from Eviction Regulations which came into force on 17 November 2020 provide that except in specific circumstances (ie trespass, antisocial behaviour, more than 9 months rent arrears accrued prior 23 March 2020 etc) residential evictions will not be carried out in England until after 11 January 2021 and only thereafter in areas not subject to Tier 2/Tier 3 lockdown restrictions. Also the moratorium on a commercial landlords right to forfeit/exercise its right to re-entry has been once again extended from 31 December 2020 to 31 March 2021 as of 9 December
Author Eileen Fingleton is an experienced dual qualified litigation solicitor who has many years’ experience handling a wide range of disputes in the First Tier Tribunal, Lands Chamber, County Court, High Court and Court of Appeal
Eileen advises on all aspects of Property Litigation, both Commercial and Residential including recovery of rent and service charge arrears, forfeiture, lease renewals, dilapidations claims, Party Wall Disputes and Right to Manage Claims
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