Hospitality Venues

  • From Thursday 24 September 2020, hospitality venues must shut their doors at 10pm with no allowance for last orders.
  • All pubs, bars and restaurants will be restricted to table service only, in groups of no more than 6 people, so long as those groups do not “mingle” with other groups.
  • Takeaway service can continue.
  • Staff and customers in indoor hospitality venues must wear masks, except when seated at a table to eat and/or drink.
  • From Monday 28 September, only 15 people will be permitted to attend weddings and civil partnerships, in groups of six.
  • Up to 30 people will be permitted to attend funerals, as long as the capacity limits for the venue allow for social distancing.
  • Some venues must remain closed including nightclubs, dance halls, discotheques and similar. These businesses may wish to re-model themselves and consider alternative permitted ways of operating, in order to continue to trade. This may be daunting for some Operators as any modifications may require changes to planning permission and a premises licence variation and will be subject to compliance with new Covid rules and regulations and provided the terms of their lease permit it.

* We have received reports from various clients that police and council officers are attending hospitality venues to check and ensure compliance with new Covid rules and regulations. Fines and warnings are being issued to non-compliant premises. Enforcement action against licensees may include a review of premises licence for those premises which ignore the new rules, incur major failings or persistently fail to comply.

Protection for Commercial Tenants

  • For those businesses struggling to stay afloat and, in turn, unable to pay their rent, the government has intervened so that Landlords cannot forfeit relevant business tenancies for non-payment of rent during the relevant period. The relevant period began on 26 March 2020 and was due to end on 30 June 2020 unless extended. This was extended to 30 September 2020 and from 29 September 2020, will increase to 31 December 2020.
  • Tenants must take into account that the intention is not to create a rent free period or rent holiday and tenants who have failed to pay rent since March 2020 will still be in breach of covenant, notwithstanding the limitations currently imposed on Landlords to prevent forfeiture during these coronavirus times.
  • The rules surrounding commercial rent arrears recovery (CRAR), which allow a landlord to instruct an enforcement agent to take control of a tenant’s goods and sell them in order to recover an equivalent value to the rent arrears, have also changed to benefit tenants during the pandemic. The minimum amount of net unpaid rent that must be outstanding, before CRAR can take place, has been increased; from 24 June 2020, 189 days’ rent must be outstanding; this will increase to 276 days’ outstanding rent from 29 September to 24 December 2020; and 366 days outstanding rent from 25 December to 31 December 2020.
  • There is currently a moratorium in place until 30 September 2020 on using statutory demands to start winding-up proceedings. This has not yet been extended.
  • The government issued a Code of Practice on 19 June 2020 for commercial landlords and tenants, to assist them with devising plans for economic recovery during the Covid-19 pandemic. The Code of Practice encourages landlords and tenants to ‘act in good faith’ and applies until 24 June 2021. Although the Code of Practice is not mandatory, the courts may consider compliance as influential and it is unknown at this stage whether there will be any cost implications for non-compliance. Please see link to the Code of Practice – https://www.gov.uk/government/publications/code-of-practice-for-the-commercial-property-sector/code-of-practice-for-commercial-property-relationships-during-the-covid-19-pandemic

Landlord Considerations

  • The government is currently doing little to protect commercial landlords who are also trying to run businesses and may run into their own difficulties if they are unable to keep up with mortgage payments and covering overheads.
  • For Landlords who do not wish to wait until after 31 December 2020 to take forfeiture action or until the level of rent is high enough to enable action to be taken under CRAR, they may wish to consider alternative options. Such action could include drawing down on rent deposits and seeking top-ups in accordance with the rent deposit deed, claiming against current guarantors, Authorised Guarantee Agreements, taking steps to recover rent from a former tenant or guarantor for pre-1996 leases (Landlords should note that any section 17 notice would need to be served within six months, beginning with the date that the arrears first fell due), issuing or progressing possession proceedings commenced due to breaches of covenant (not including failure to pay rent).
  • Landlords could potentially serve a statutory demand. The moratorium on using statutory demands to start winding-up proceedings expires on 30 September 2020. This has not currently been extended but we will need to ‘watch this space’ as this could change.

** Please contact us for further advice

Joanna Onisiforou – Associate – 0207 759 1371

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