News & Insights

Coronavirus Act 2020 & CPR Practice Direction 51Z–Update on the measures to protect commercial tenants

Mark Banham, Associate in the property litigation team provides an update on the measures put in place by the Government and the Judiciary to protect commercial tenants from forfeiture and possession proceedings up to 30 June 2020.

In my previous article back on 25 March I explained the plans the government had to protect commercial tenants by way of the emergency Coronavirus Bill. The Coronavirus Act 2020 received royal assent on 25 March 2020. Section 82 deals with the protection of commercial tenants from forfeiture either by way of peaceable re-entry of the premises (i.e. changing the locks) or by way of Court proceedings on the grounds of rent arrears for the period 26 March 2020 to 30 June 2020.  The Act makes it clear that a landlord will not lose its right to forfeit in the future unless it expressly waives its right and that “rent” includes any sum that a tenant is liable to pay under the commercial lease (i.e. service charges, insurance rent and interest).

On 27 March 2020 the Master of the Rolls and Lord Chancellor signed an amending Practice Direction to the Civil Procedure Rules, known as Practice Direction 51Z, setting out how the Court rules will be amended, in particular with regards to possession action, to reflect the changes brought in as a result of the Coronavirus Act 2020.  The effect of the practice direction has been to stay all proceedings for possession brought under CPR Part 55 (which concerns both residential and commercial property) and all proceedings seeking to enforce an order for possession by a warrant or writ of possession for a period of 90 days from 27 March 2020. There has been much debate as to whether the 90 day stay included claims for possession of premises against unlawful occupiers, which would normally be issued under Part 55 of the CPR. It was of great concern to property lawyers and landowners alike that an unintended consequence of the measures to protect tenants was that proceedings against trespassers could not be issued at Court until the stay was lifted. I am pleased to confirm that the issue has today been put beyond doubt as the Practice Direction has been amended to include paragraph 2A which clarifies that the stay will not apply to proceedings against trespassers.

Notwithstanding the above landlords are still able to enforce the terms of leases by other means, however, it remains to be seen whether the moratorium on forfeiture and possession action will be extended or whether further measures will be implemented to protect commercial tenants as the pandemic continues.