The UK government has announced a string of short-term measures to protect commercial tenants struggling to make rent payments due to the Covid-19 outbreak
The new provisions are in addition to those already implemented by the UK and Scottish Governments in relation to commercial landlords and tenants: Landlords in England are currently restricted from evicting tenants until 30 June 2020, while in Scotland, the notice period for irritancy (forfeiture) for non-payment of sums due under a lease has been temporarily extended from 14 days to 14 weeks.
Given the First Minister's statement last night (23 April 2020) it is foreseeable that the 14 weeks' notice period will be extended by the Scottish Government (They reserved the right to do so). That extension would be likely to apply to irritancy warning notices already served.
Stat demands and winding up
Under the UK Government's Corporate Insolvency and Governance Bill, landlords and creditors will be banned from serving statutory demands or applying for winding up petitions against companies that cannot pay rent due to the impact of Covid-19. The restrictions will remain in place until 30 June. The Government has the right to extend this expiry date.
Tenants are still obliged to pay rent and the announcement suggests that landlords will be able to submit winding up petitions against companies refusing to pay for non Covid-19 related reasons. Courts will undertake a preliminary assessment of winding up petitions to establish the tenant's reason for non-payment.
Scotland
It's not yet clear if these restrictions will apply to Scotland. The regulation of statutory demands is arguably reserved to Westminster. However, we don't yet know for sure how the UK Government intends to bring the restriction into law. It may be that secondary legislation from the Scottish parliament would still be necessary. We will only know that once the detail of the new Bill has been published.
If the UK Government is granting this protection to tenants, we would expect the Scottish courts to act in the same spirit and refuse to allow a landlord to wind up based on an expired stat demand if the company could not pay only because of Covid-19 reasons.
CRAR
Landlords in England and Wales will only be able to act under the CRAR procedure to recover rent arrears from commercial tenants when the equivalent of 90 days' rent becomes due (as opposed to 7 days' rent).
The equivalent procedure in Scotland is a money attachment. That hasn't been banned by the Scottish Government. The closure of the court officers that serve these attachments for all but urgent business means, however, that landlords have been unable to serve money attachments for quite some time now.
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