Guidance for commercial leases and mortgages during COVID-19
The Government has acknowledged that many of these commercial leases will be affected by COVID-19 and the response to COVID-19.
To that end, the Government has now announced its intention to make some temporary changes to the Property Law Act 2007.
These changes are intended to be introduced on 27 April 2020 and will apply from 8 April 2020 for a period of six months.
The Government has announced the intention to make the following changes:-
The current position under the Property Law Act 2007 is that commercial Landlords must provide at least 10 working days’ notice before cancelling a lease due to overdue rent.
The proposed changes will extend this notice period from 10 working days to 30 working days.
The Government has suggested that this change will provide Tenants with additional time to approach their Landlord to discuss temporary relief under their lease and/or catch up on outstanding rent payments.
It worthwhile noting that this change does not necessarily change the payment obligations of the Tenants, but simply provides an extended notice period before a Landlord can legally cancel a lease.
The current position under the Property Law Act 2007 is that Lenders must provide 20 working days notice before taking steps to enforce their mortgagee powers.
The proposed changes will extend this period from 20 working days to 40 working days and will apply to both residential and commercial lending.
The Government has suggested that this change will assist Landlords/Borrowers that often rely on rent from Tenants in order to make their mortgage payments. It will provide Landlords/Borrowers with additional time to approach their
Lender to discuss temporary relief in the form of payment reductions or mortgage holidays.
Again, this change does not change the payment obligations of the Borrower to the Lender, but simply provides additional time before a Lender can take steps to enforce their mortgagee powers.
The Government has indicated that these changes are intended to support both Landlords and Tenants in retaining existing lease arrangements and getting back to business as usual post COVID-19.
Please do not hesitate to contact one of the team at AWS Legal to discuss what these changes mean for you or your business.
This advice is general in nature. The specific terms of each lease and each Tenant’s circumstances should be considered on a case-by-case basis.