Further Uncertainty for UK Commercial Landlords as Extension to Prohibition on Forfeiture is Announced
The UK Government has announced that the temporary prohibition on forfeiture will be extended when the current prohibition comes to an end at the end of the year. The restriction, that prevents commercial landlords from forfeiting a lease for non-payment, will now be in place until 31 March 2021.
Commercial tenants who are still struggling under the weight of an extremely difficult trading year will no doubt be glad to hear of the extension, particularly at a time when many businesses may hope to see an increase in trading over the Christmas period and possible January sales, which could improve their financial position.
However, commercial landlords will be less pleased given the additional cash pressure it places on them due to inability to recover rental payments. This, combined with the extension to the ban on winding up petitions (see our blog on this) means that some landlords will be waiting many more months before rental payments are made or steps can be taken to recover payment.
We have seen a number of high-profile collapses on the high street in the last couple of weeks which must also be of concern to commercial landlords given that insolvency is likely to mean landlords will recover p in the £ rather than full rent. However, with the current restrictions on recovery in place there is very little that a commercial landlord can do if their tenants are not paying rent, other than hope that trading improves and tenants can once again meet their payment obligations.
In Septmber, we discussed the impact of this for commercial landlords, see our previous blog here.
This article was written by Rory Thomas.