Covid 19 – Business Tenancies in Northern Ireland

In well-drawn commercial leases there is invariably provision that the landlord may bring proceedings for re-entry of the premises and termination of the lease if the rent is in arrears or the tenant is in breach of its obligations. A landlord will also be able to rely upon common law rules and statutory provisions to re-enter premises to determine a lease if the tenant has not complied with its covenants.

To give tenants a degree of protection in these uncertain and difficult times the government has, in the recently enacted Coronavirus Act 2020, effectively frozen such rights of re-entry or forfeiture until 30th June 2020 or such later date as may be specified by the Department of Finance where a tenant has failed to pay rent or any other sum liable to be paid under a business tenancy. During this period courts are prohibited from making an order in pursuance of the right of re-entry or forfeiture to the effect that possession of business premises is to be given to a landlord.

It should be noted that this does not act as a waiver of the tenant’s obligation to pay the rent and other sums due under the business tenancy. If any outstanding sums are not therefore paid when the specified period expires the courts will be at liberty to make such orders of re-entry or forfeiture. It should also be noted that this prohibition on court orders does not extend to any other breaches of the covenants or conditions of a lease (e.g. repair) and so tenants should ensure that they continue to comply with these obligations.

The Coronavirus Act 2020 furthermore prevents a landlord from using a tenant’s failure to pay the rent or other sums due under the lease during this period as a ground for opposing a tenancy renewal under the Business Tenancies (NI) Order 1996.

Should you require any advice in relation to the above please contact Aleric Turtle at aleric.turtle@mtb-law.co.uk or 07739322340