Business Tenancies in Wales and England
In March 2020, a moratorium was put into place to prevent landlords from taking action against tenants for unpaid rent during the Covid-19 pandemic. The means that landlords have been unable to pursue tenants for unpaid rent that has accrued during the pandemic by forfeiting their lease. The moratorium was due to end on 30th June 2021 but has now been extended.
In England, the extension of the moratorium will be until 25th March 2022, a notable departure from Wales in which the extension will be until 30th September 2021.
In Wales, the Business Tenancies (Extension of Protection from Forfeiture) Regulations 2021 were laid before Senedd Cymru on 28th June 2021, over a week after the extension of the moratorium was announced in England. The Welsh regulations extend the protections from forfeiture for non-payment of rent in Wales until the end of September.
Forfeiting Commercial Leases
The Welsh Economy Minister Vaughan Gething has said that the pandemic has been a “harrowing experience for us all” and that since the beginning of the pandemic, the government has committed more than £2.5 billion to businesses throughout Wales.
The moratorium does not prevent the rent from accruing. Rather it prevents landlords from being able to forfeit the lease during this period for non-payment of rent. As tenants will still be liable for the rent arrears, it is important that landlords and tenants try to work to negotiate an agreement as to how the arrears will be paid. Tenants should continue to pay rent wherever possible.
Additionally, the moratorium does not prevent landlords from forfeiting commercial leases for breaches of other lease covenants.
The Hardest-Hit Sectors
The hardest-hit sectors in Wales will also benefit from a continuing business rates holiday package. The business rates holiday in England ended on 1st July 2021, whereas in Wales, businesses in the retail, leisure and hospitality sectors will not have to pay any rates until April 2022.
Debts of commercial rents have accrued during the pandemic and continue to do so whilst many businesses are unable to trade normally.
The moratorium extension will be welcome for businesses that have struggled to operate fully since the first lockdown last year, particularly those in the hospitality and leisure industry.
However, the lengthy extension to the moratorium in England will be disappointing for landlords whose income will have been affected and whose options remain limited when facing tenants who refuse to engage in an effort to address arrears of rent.
Here to help
If you have any more questions or would like further information regarding the moratorium, you can contact our Property Litigation Team on 0161 941 4000 or email The Real Estate Litigation Team.