Covid-19 Bounce Back loans for property businesses16:06 PM, 5th May 2020
About 4 weeks ago 47
I believe the guidance is clear regarding rental payments in relation to downturn. The case in Central London Property Trust v High Trees House  KB 130 deals with this in issue which should be of great interest to all.
If the tenant is still in situ then past consideration is not good consideration. In effect that the tenant is already under obligation to make payment under their existing tenancy agreement and full rent is due as the tenant is able to claim relevant benefits and government subsidies.
On the other hand, if the the tenant has vacated then this can amount to new consideration as the property has become vacated and would allow the the landlord to re-let should the situation improve. Promissory estoppel would prevent landlords going back on their promise to accept vacant possession in lie of of the return of keys/money.
If the landlord agreed to allow the tenant to remain and they both agree to accept less rent during this period of COVID, then no doubt that a promise to accept a smaller sum in discharge of a larger sum, if acted upon, is binding notwithstanding the absence of consideration under the concept of Promissory estoppel. The lower rent despite the fact that the promise was unsupported by good consideration, was successfully argued as new consideration in the above case . This would last until the tenants situation improved .
In the High Trees case, this arose during the war and the facts are very similar to COVID.
High Trees leased a block of flats from CLP (landlords) at a ground rent of £2,500 per month. It was a new block of flats at the time the lease was taken out in 1937. The defendant had difficulty in getting tenants for all the flats and the ground rent left High Trees with no profit.
In 1940 many of the flats were still unoccupied and with the conditions of the war prevailing, it did not look as if there was to be any change to this situation in the near future.
CLP (Landlords) agreed to reduce the rent to £1,250 during the down turn years. The agreement was put in writing and High Trees paid the reduced rent from 1941.
Just before the war was over the flats became fully occupied and the claimant/landlords sought to return to the originally agreed rent as tenants circumstances recovered.
The rent would be returned to the originally agreed price for the future only when the occupancy returned to normal.
CLP could not claim back the arrears accrued during the war years when the flats were half vacant but the tenants were held liable when they became fully occupied and the conditions for them had recovered even though they failed to inform the landlord CLP.
Once the fog had lifted (COVID) the full liability was due once the tenants came out of difficulty.
Given most tenants qualify for government support I cannot see how you could argue that there is this difficulty with payments of rent and therefore full liability should be requested, all be it with some lag on payments being made.
Wikipedia >> Click here
“Central London Property Trust Ltd v High Trees House Ltd  KB 130 is a famous English contract law decision in the High Court. It reaffirmed and extended the doctrine of promissory estoppel in contract law in England and Wales. However, the most significant part of the judgment is obiter dicta as it relates to hypothetical facts; that is, the landlord did not seek repayment of the full wartime rent.
Denning J held estoppel to be applicable if
a promise was made which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made and which was in fact so acted on.”
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