Landlords are increasingly frustrated with tenants who simply will not pay their rent and arrears.  Whilst some tenants are genuinely suffering, there is a feeling that some are using Chancellor Sunak’s moratorium on forfeiture as a budget management tool.

The suspension of forfeiture, a vital weapon in any landlord’s arsenal, is due to end in March 2022 (see “UK Government issues policy statement on Commercial Rent Debts“); Commercial Rent Arrears Recovery (the “CRAR”) which is the mandatory form of distress introduced by statute should also end at the same time.

Continue Reading What action can a Landlord take against defaulting Tenants?

Fragment of a new apartment building with ventilated facade

As previously reported (“Commercial property evictions ban extended until 25 March 2022“), on 24 June 2021 the UK Government extended the moratorium on landlords evicting commercial tenants for non-payment of rent during the pandemic under s82 of the Coronavirus Act 2020 until 25 March 2022. Similarly, the restriction on the Commercial Rent Arrears Recovery (CRAR), which prevents landlords seizing a tenant’s goods in lieu of rent unless the tenant has more than 554 days’ of rent arrears, was extended until 25 March 2022. The restriction on the serving of winding up petitions based on a statutory demand under the Corporate Insolvency and Governance Act 2020 was also extended until the 30 September 2021. Continue Reading UK Government issues policy statement on Commercial Rent Debts

residential houses

The government has launched the Building Safety Bill, which sets out a new regulatory regime for high-rise residential and other in-scope buildings, based on Dame Judith Hackitt’s review, following the Grenfell tragedy. The Bill, which has had its first reading in the House of Commons, will, as currently drafted:

  • establish the Building Safety Regulator within the HSE to provide oversight for all buildings and to introduce a more stringent regime for higher-risk buildings during design, construction, and refurbishment;
  • introduce amendments to the Defective Premises Act 1972 to allow claims to be brought for historical defects that make a dwelling unfit for habitation, extending the limitation period from 6 years to 15 on a retrospective basis;
  • extend the Act to cover all work on residential property that makes a dwelling unfit for habitation;
  • introduce a stronger and clearer framework for the regulation of construction products and ‘pave the way’ for a National Regulator for Construction Products to be established in the Office for Product Safety and Standards; and
  • introduce wider improvements including changes to the Architects Act 1997, the Regulatory Reform (Fire Safety) Order 2005 (the Fire Safety Order) and the Housing Act 1996, and provisions to establish a New Homes Ombudsman.

See building regulatory system and building safety bill.

 

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Modern Architecture in Berlin

The Government has announced that new legislation will be introduced in this Parliamentary session to ring-fence outstanding commercial rent arrears built up by tenants due to the COVID-19 pandemic and to introduce measures to guide tenants and landlords to come to an agreement on how to deal with the money owed, either by waiving some of the total amount or agreeing a longer-term repayment plan. If agreement cannot be reached, the new legislation will put in place an arbitration process to make a formal award that will be legally binding and must be adhered to by both parties.

Until these new rules come into force the existing measures to protect commercial tenants from eviction will be extended from 30 June 2021 to 25 March 2022. The Government has also extended the restrictions on landlords using Commercial Rent Arrears Recovery (CRAR) to recover unpaid rent to 25 March 2022 as well, which increased the total number of days’ outstanding rent required for CRAR to be used to 544 days. Statutory demands and winding up petitions will also remain restricted for a further 3 months until September to protect tenants from enforcement action where their debts relate to the COVID-19 pandemic. The extensions will apply to all businesses, but the new measures introduced by legislation will only cover those businesses impacted by closures. This means that rent arrears accumulated before March 2020 and after the date when relevant restrictions on trading are lifted, will be actionable by landlords as soon as the tenant protections are lifted.  There is no restriction introduced on landlords suing for rent arrears as a simple debt claim.

Continue Reading Commercial property evictions ban extended until 25 March 2022

The Government is consulting on the design of the new Residential Property Developer Tax, ahead of its inclusion in the 2021-22 Finance Bill. The tax is one of two revenue raising measures to help pay for the Government contribution to the costs of remediation of unsafe cladding.

As previously announced, the new tax is time-limited and is to apply to the largest residential property developers in relation to their income from UK residential development.

The consultation runs until 22 July 2021.

See residential property developer tax consultation.

 

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Further to our update on the Government’s residential leasehold reforms, the Leasehold Reform (Ground Rent) Bill was introduced into the House of Lords on 12 May 2021. The bill seeks to fulfil one of the proposals set out in the Law Commission’s enfranchisement report and follows on from the Government’s press release made earlier this year, to tackle the inconsistency and ambiguity of ground rents for future residential leaseholders.

Continue Reading Leasehold Reform (Ground Rent) Bill published

Building reflections in the city of London

The COVID-19 pandemic and its consequences have had a turbulent effect on the retail, leisure and hospitality sectors in the UK. Government regulations in response to the pandemic have required tenants to close their premises to the public for long periods of time, causing profits to plummet, whilst landlords have been faced with rent ceasing to be paid and few remedies remaining available to them due to Government restrictions prohibiting leases being brought to an end by forfeiture for non-payment of rent and preventing the use of statutory demands and winding up petitions based on non-payment of rent until summer 2021.

There has been particular dispute and discussion as to upon whom (landlords, tenants and/or insurers) the burden of the financial detriment caused by the pandemic should fall. For this reason, the recent judgment in Bank of New York Mellon (International) Ltd v Cine-UK Ltd and others [2021] EWHC 1013 (QB) is important as it tackles head-on the thorny issue as to whether rent remains due and payable by tenants of commercial premises in spite of the circumstances of the pandemic.

Continue Reading Commercial rent arrears payable despite COVID-19 pandemic

Detail in Modern residential apartment flat building exterior

Earlier this year, the UK Government reconfirmed its intention to bring forward residential leasehold reforms following the Law Commission’s recommendations last year. The proposed changes are expected to benefit up to 4.5 million leaseholders.

The news will no doubt be welcomed by leasehold homeowners who have been campaigning for changes to what they perceive to be unfair ground rent laws. However, the impact on developers, house builders and landlords, is less clear, but it is likely to affect the legal structuring of both the ownership and the ongoing management of new residential developments.

In this article, we consider what the proposed reforms are, when they are expected to come into effect and some of the potential implications on developer landlords or investors.

Continue Reading Ground Rent Reform – what’s happening and when?

There is just over a week left to participate in the Government’s consultation on the withdrawal or replacement of the protections it has put in place to protect commercial tenants during the COVID-19 pandemic. On 6 April 2021 the Government launched a consultation calling for those involved in the commercial property sector to participate in a survey on what should happen when the current restrictions placed on landlords come to an end on 30 June 2021. The consultation is open to all those with an interest in commercial property and will end at 11.45 a.m. on 4 May 2021.

Continue Reading Government consultation on withdrawal of moratorium on evictions ends on 4 May 2021

 

 

 

 

The Housing Secretary has announced:

  • new funding for the replacement of unsafe cladding for all leaseholders in residential buildings 18 metres (6 storeys) and over in England;
  • a new scheme for buildings between 11 and 18 metres for cladding removal, where needed, through a long-term, low interest, Government-backed financing arrangement;
  • plans for a ‘Gateway 2’ developer levy, to apply when developers seek permission to develop certain high-rise buildings in England;
  • a new tax for the UK residential property development sector;
  • the Government will bring forward legislation this year to tighten the regulation of building safety and to review the construction products regime to prevent malpractice arising again.

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If you wish to receive periodic updates on this or other topics related to UK real estate, subscribe to our Real Estate Insights mailing list.
For any other legal questions related to UK real estate, please get in touch with your usual Mayer Brown contact or one of the blog editors