A landlord’s remedies to recover arrears of rent – where are we now?
The Corporate Governance and Insolvency Bill provides detail on the new measures to safeguard the high street against aggressive debt recovery actions during coronavirus.
We covered in our article on 28 April the Government’s proposed new measures to safeguard the High Street against aggressive debt recovery actions during the coronavirus pandemic. At the time, no detail had been published as to how the Government intended to restrict a landlord’s use of statutory demands and winding up petitions.
The Corporate Governance and Insolvency Bill published last week provides that detail. Assuming no substantial amendments are made before the Bill becomes law (which is expected to happen with unusual haste), a landlord (and indeed, despite the Government’s announcement, any creditor of the tenant company) will be barred from presenting a winding-up petition on or after 27 April on the basis of a statutory demand served during the period running from 1 March to the later of 30 June or one month after the Bill comes into effect (known as the “relevant period”). In addition, a landlord will be barred from presenting a winding-up petition during the relevant period on any other grounds unless it has reasonable grounds for believing that coronavirus has not had a “financial effect” on the company or that the debt issues would have arisen even if coronavirus had not had a “financial effect” on the company. In other words, the onus of proof will be on a landlord to show that its tenant’s failure to pay has nothing to do with the current situation (a high bar where a landlord does not have full access to a tenant’s financial position). Detailed provisions in the Bill mean that, once passed, it will have retrospective effect from 27 April (so there is nothing to be gained by a landlord ‘getting in early’ before the Bill becomes law).
So where does that leave a landlord in terms of remedies where its tenant has failed to pay rent? The Coronavirus Act prevents a landlord from forfeiting (i.e. terminating) a lease for non-payment of rent (and other sums dues under a lease) until at least 30 June. In addition, as mentioned in our previous article, new Regulations were passed last month preventing landlords from exercising the statutory procedure known as Commercial Rent Arrears Recovery (or CRAR) (which allows a landlord to instruct an enforcement agent to take control of a tenant's goods and sell them to recover an equivalent value to the rent arrears) unless 90 days or more of unpaid rent is owed. However, other remedies are still available to a landlord. In particular:
- Rent is still payable and so a landlord can still sue its tenant for arrears outstanding.
- A landlord can also still sue any guarantor for the current tenant.
- Depending on the particular facts and circumstances, a landlord may still be able to sue a former tenant or a former tenant’s guarantor (subject to the correct statutory notices being served).
- The restrictions in the new Bill only relate to companies, so a landlord can still serve a statutory demand on an individual tenant (e.g. a sole trader).
- CRAR is still available where 90 days or more of unpaid rent is owed (assuming a landlord can find an enforcement agent willing to act in the current circumstances). This is significant where rent is payable in advance on the traditional quarter days (25 March, 24 June, 29 September and 25 December) because only one of the four quarters lasts less than 90 days. For example, there are 91 days in the quarter from 25 March to 23 June. So if a tenant has not paid anything towards the rent due on 25 March (and assuming no concession, holiday or deferment has been agreed by the landlord), the landlord can still (in theory at least) exercise CRAR to recover those sums owing.
- If a tenant provided a rent deposit to its landlord on the grant or assignment of its lease, a landlord can still draw down on that deposit to recover sums owing (although the landlord will not be able to threaten forfeiture or exercise CRAR if it wishes to enforce the standard tenant obligation to top up the deposit).
Most reasonable people believe that parties to contracts should ideally look to ‘share the pain’ of the current crisis for the long-term good of the country and its economy (indeed, Cabinet Office guidance published earlier this month says as much). Whether you think the law has now struck the right balance in a landlord and tenant context will though inevitably depend on which side ‘your bread is buttered’.
Contact

David Harris
Professional Development Lawyer
david.harris@brownejacobson.com
+44 (0)115 934 2019
Related expertise
You may be interested in...
Press Release
Browne Jacobson advise Maven Equity Finance on investment in Traverse Associates
Press Release
Three strong restructuring and insolvency team join Browne Jacobson
Podcast
The real estate podcast: How AI and tech is changing real estate
Legal Update
How to negotiate better ‘green’ provisions in your leases
Opinion
The Metaverse's influence on real estate: Implications for commercial retail clients and law firms
Guide
How to manage supply contracts and avoid disputes
Legal Update
Utilising prime retail sites to improve the health of our nation
Legal Update
A new era of opportunity for high street regeneration?
Opinion
Practical points from High Court ruling that Tesco has infringed Lidl’s IP rights in its famous yellow circle logo
Legal Update
Pitfalls for retailers to avoid when offering access to ‘buy now, pay later’ products
Press Release
Browne Jacobson’s Manchester dealmakers advise Spatial Global on its acquisition of Heathrow based freight specialist Hollyport Logistics
Opinion
Supreme court rules on retail tenant's service charge bill
Published Article
Consumer duty part 3 - 'The drill-down' into the 'cross-cutting' rules
On-Demand
The UK's green agenda - the outcomes of COP27 and actions since COP26
Press Release
Browne Jacobson’s retail lawyers advise Wilko on its strategic £48m sale and leaseback of Nottinghamshire distribution centre to DHL
Press Release
Suzanne Harlow joins Browne Jacobson as Non-Executive Director
Law firm Browne Jacobson is pleased to announce that Suzanne Harlow has been appointed Non-Executive Director of its Retail, Consumer & Logistics sector.
Legal Update
Is this the end for free returns?
Earlier in the year a number of fashion retailers, boldly announced the introduction of a charging fee for returning any product purchased via their online store. Yet, despite this commercial, and perhaps somewhat controversial decision, at least one major fashion giant that adopted this approach has recorded ‘historic highs’ in its September profits. Browne Jacobson partner, Cat Driscoll who heads up the firm’s commercial team in Manchester and is also head of its Fashion & Beauty sector discusses whether this change has put the average consumer off and whether the days of free returns are long gone.
Published Article
AI generated designs on retail products
Every AI will have its own terms of use. DALL·E 2’s Terms of Use dated 3 November 2022 specify that as between a user and Open AI, a user owns their prompts and uploads. Open AI also assigns to the user all rights in any images generated by DALL·E 2 for that user (subject to the user complying with those Terms of Use, and to a licence to use inputs and output to develop and improve the services).
Published Article
Consumer duty part 2 - 'The drill-down' into the 'cross-cutting' rules
Published Article
Luxury brands and sustainability – The challenges and solutions
Legal Update
The Retained EU Law
Created at the end of the Brexit transition period, Retained EU Law is a category of domestic law that consists of EU-derived legislation retained in our domestic legal framework by the European Union (Withdrawal) Act 2018. This was never intended to be a permanent arrangement as parliament promised to deal with retained EU law through the Retained EU Law (Revocation and Reform) Bill (the “Bill”).
Opinion
Rent arrears post-Covid: What are the landlord’s options?
Since the beginning of the pandemic, landlords and tenants have experienced significant limitations in the way rent arrears could be pursued. We first saw the moratorium on the recovery of Covid related arrears, and more recently we’ve experienced the implementation of the Covid arrears arbitration scheme.
Published Article
Consumer duty part 1 - 'The drill-down' into the 'cross-cutting' rules
This article is the first in a series aimed to help firms get to grips on a practical basis with the ‘cross-cutting rules’ within the new ‘Consumer Duty’ framework.
Press Release
Browne Jacobson appoints its first Non-Executive to Chair to support its corporate sector strategy board
Press Release - Firm news
Browne Jacobson strengthens its UK&I commercial practice with hire of new retail & consumer specialist partner
Browne Jacobson has bolstered its commercial practice in the UK with the appointment of commercial contracts and international trade specialist, Emma Roake, into its City-based London team.
Opinion
Cameras in convenience stores: a potential hornet’s nest..?
Published Article
Sole director decisions: Another perspective
Legal Update
Merger and Acquisition trends in the specialist lending market
Published Article
RAAC planks and its impact on local authorities
Recent reports of flat roofs constructed using RAAC planks collapsing without warning prompted the SCOSS alert.
Opinion
Court of Appeal overturns “fire and re-hire” injunction
The Court of Appeal overturned the “fire and re-hire” injunction, finding that there was nothing in the express contractual provisions preventing Tesco from giving the notice to terminate employment in the usual way.
Legal Update
The Omnibus Directive is almost here
On-Demand
Building Safety Bill – what’s coming and how will it affect you?
In anticipation of the adoption of the Building Safety Bill, our specialist compliance and regulatory team will give an overview of the measures proposed in the Bill.
Opinion
Building Safety Bill amendments
Legal Update
W (No.3) GP (Nominee A ) Ltd and another v J D Sports Fashion Plc (Nottingham County Court, 22 October 2021)
The County Court refuses the landlord’s request to include a turnover rent in a statutory lease renewal.
Legal Update
Employment Tribunals 2022-23 – What to Expect
The Presidents of the Employment Tribunals England and Wales and Scotland have issued a new road map for 2022-23, providing an update on the resourcing challenges faced by employment tribunals and the steps put in place to address these.
Opinion
Government’s proposals for dealing with pandemic rent arrears finally reach the statute book
The Commercial Rent (Coronavirus) Act 2022 was finally passed yesterday (24 March) and comes into force immediately.
Press Release
Browne Jacobson broadens its construction offering with appointment of nuclear and renewable energy specialist
Browne Jacobson has broadened its national construction and engineering offering with the appointment of construction partner Zoe Stollard into its Birmingham office.
Legal Update
Agile contracting in Government
The key benefits and pitfalls for agile software contracting, and recommendations for government bodies.
Opinion
Covid-19 rent arrears – the questions that remain
The Government appears set to announce plans on ‘living with Covid to restore freedom’. With the success of the retail and hospitality sector key to recovery, what protections will be on offer to tenants to deal with Covid-19 rent arrears?
Opinion
Are whistleblowers entitled to keep their employer’s confidential documents?
In Nissan v Passi, the High Court recently considered the issue of an employee retaining confidential documents belonging to his former employer in the context of the employer’s application for an injunction seeking the return of such documents from the employee.