Receivership during the COVID-19 era: What next for commercial landlords?


Daniel Richardson - Partner CG&Co

The ban on commercial evictions is biting – and this issue will not subside for lenders for some considerable time to come.

It’s been well documented that restraints were originally placed on commercial landlords’ ability to recover outstanding rents last spring.

This lack of rent has obviously been impacting on borrowers’ abilities to make their mortgage payments ever since.

To place the situation that’s currently being experienced by many lenders in context, let’s examine the circumstances that have led to this point …

After the pandemic hit, the government introduced restrictions which directly affected commercial landlords’ remedies for the recovery of unpaid rent from tenants.

This included Section 82 of the Coronavirus Act 2020 which prevents any forfeiture – whether by proceedings or peaceable re-entry – of the vast majority of commercial leases for non-payment of any sums due under the lease.

This was originally due to run between March 26, 2020, and June 30, 2021.

But the government announced on June 16, 2021 – just a fortnight before this was due to expire – that it intended to extend Section 82 until March 25, 2022.

If this ban is finally lifted next March – and the date isn’t postponed once again – it will mean that commercial tenants have benefitted from two years’ protection since the beginning of the pandemic.

At CG&Co, we’ve witnessed first-hand the understanding that lenders have displayed to borrowers throughout the Covid-19 crisis.

But this level of patience and understanding was always likely to wane – and particularly after such a long period.

So, what must be done now?

At this point in time, it remains imperative that lenders encountering default loans linked to commercial real estate take the most proactive approach to Property Receivership at the earliest opportunity.

Upon appointment, we immediately start working with borrowers to resolve the situation and – as part of this process – we actively seek resolution with any tenants.

At CG&Co, our in-house legal team are always monitoring developments to provide our clients with a competitive advantage.

What’s more, we ensure that rent is consistently collected when it’s due.  When the property is a mix of commercial and residential, then the residential rent can be collected, even if there are issues with the commercial aspect.

We’ve achieved this for clients over the past year and, as restrictions are increasingly lifted in coming months, believe our ability to collect rent will only gain momentum.

Throughout the pandemic, CG&Co has consistently progressed commercial cases as far as possible at the earliest opportunity despite the stays on terminating leases.

And on those occasions when the sale of a commercial property is the only viable outcome, we remain committed to progressing this as far as possible until the stay is ultimately lifted next March.

When the commercial property is deemed “strong” – and we’re encountering many in this category – we’re selling these properties with the existing tenancy in place.

It’s been interesting to observe that many investors are taking a view on what they may inherit as a tenant prior to the stay being lifted next year.

To conclude, CG&Co continues to work exceptionally hard on behalf of our clients through these unprecedented times.

When it comes to default loans on commercial properties, there remains much that can be done.

But you resolutely need the most proactive firm of property receivers on your side to ensure the best possible outcome.