Property Rights During COVID-19

As a dictation of this article the current restrictions announced by the government on 26 March 2020 still apply in terms of lockdown. The Government have announced some minor changes on the 10th May but these are very small changes.

The government entered into a raft of legislation and statutory instruments following the imposition of the lockdown on 23 March and the impact upon property rights for residential and commercial tenancies have been extensive.

In relation to the commercial residential market, Landlords were immediately being requested to discount rent and on an overall basis only approximately 48% of commercial rent has been paid.

The legal position is that in respect of arrears of rent the landlord cannot commence proceedings to forfeit a business lease until three months have passed at least until 30th June 2020. This does not stop the landlord from proceeding for possession of business premises in respect of other breaches although the definition of rent is widely defined and can include other financial obligations.

The period in which the landlord can take possession of commercial properties through an enforcement agent (the old rights of distress for unpaid rent) has also been extended to 90 days unpaid rent before enforcement action can be taken.

In relation to the residential market, landlords cannot take possession of the property unless a notice specifying the date for delivery of possession specifies at least 90 days for possession to be delivered.

Additionally, possession and eviction application cases currently before the Court are stayed until 27th June 2020.

However, this does not stop the landlord from seeking court action in respect of unpaid obligations in the normal way and the threat of those proceedings may force payment.

Some aggressive landlords have used the Insolvency Court as a method of obtaining payment of rent for example by issuing a statutory demand against the tenant where rent is unpaid.

The general position is that there is now a moratorium on the issue of a statutory demand for unpaid rent which are COVID related until 30 June 2020 although this does not stop a winding-up petition being issued but the Court retains the discretion not to allow the winding-up petition to proceed if the reason for arrears of rent is COVID related.

It remains to be seen whether these time limits will be extended in line with the government’s general policy towards relaxation of the lockdown and how stringent the next stages will be. No doubt in the near future there will be legal arguments and debates as to whether a tenant who is unable to open their premises are under an obligation to make payment of rent and whether in the lease scenario a tenant can use an argument of force majeure to enable them to be relieved completely of rental obligations.

These are all interesting and complex arguments.

If you wish further advice on this then please contact us.