Insights Commercial Property Law – Key Considerations (August 2021)

Our August 2021 summary of the latest developments in Property law and practice is as follows:

The Government has made a surprising announcement to extend the “Relevant Period” (which sees restrictions preventing landlords of commercial premises from evicting their Tenants for non-payment of rent) by a further nine months (in England). This extension now runs to 25 March 2022 in England, and 30 September 2021 in Wales.

This restriction has been extended a number of times and has now been extended again for all businesses to ensure that those who were unable to open have enough time to come to an agreement with their landlord without the threat of eviction.

The regulations extending the “relevant period” under section 82 of the Coronavirus Act 2020 for England and Wales, also have an impact on the use of Commercial Rent Arrears Recovery (CRAR) under sections 71 to 87 of the Tribunals, Courts and Enforcement Act 2007.

During the relevant period (until 30 September 2021 in Wales and until 25 March 2022 in England), the minimum amount of net rent that must be unpaid for the purpose of section 77(3) TCEA 2007 is an amount equal to 554 days’ rent.

Winding-up petitions and statutory demands restrictions have also been extended, to 30 September 2021.

The government issued a press release on 16 June 2021, stating that new legislation will soon be introduced to ‘ring fence’ rent arrears accrued while premises were forced to close during the pandemic.

Landlords will be expected to make allowances for these ring-fenced arrears and they may be required to share the financial burden with their tenants. It is also expected that the new legislation will set out a binding arbitration process for those landlords and tenants who cannot come to a suitable agreement.

The legislation implemented will need to be reviewed in detail, as only those rent arrears which accumulated during specific periods of closure after March 2020 (during which a business was not permitted to open due to lockdown restrictions) will be ringfenced. No forfeiture will be permitted at all in respect of any such “ringfenced” rent arrears whether before or after 25 March 2022.  What landlords are allowed to do in respect of such arrears is not yet clear. It is also not clear how this applies to office premises where prohibitions on opening were less strict.

The temporary extension of the time period for notifying an option to tax has been extended again. The time limit for notifying an option to tax is normally 30 days from opting to tax. This was extended by HMRC to 90 days from the date the decision to opt was made. The extended notification procedure will now apply to all decisions made between 15 February 2020 and 31 July 2021.

The UK Government has launched a Consultation on regulations to implement the Telecommunications Infrastructure (Leasehold Property) Act. The Act will grant operators interim rights under the Electronic Communications Code where landowners fail to respond to their requests to allow them access to blocks of flats to install broadband for residential tenants. The Consultation focuses on proposals for the terms that will accompany those interim Code rights, but importantly also suggests that the scope of the Act may be extended to certain commercial properties (e.g. office blocks, business parks, etc).