Commercial Rent (Coronavirus) Bill to resolve commercial rent debts accrued because of the impact of the coronavirus pandemic

09.11.2021

The Government has today introduced the Commercial Rent (Coronavirus) Bill to resolve commercial rent debts accrued because of the impact of the coronavirus pandemic.

Commercial tenants are currently protected from eviction until 25 March 2022 so as to allow time for landlords and tenants to negotiate how to share the cost of commercial rent debts caused by the pandemic.

Where landlords and tenants are unable to negotiate commercial rent arrears in accordance with a new Code of Practice, either party will be able to apply to have the matter determined in accordance with a legally-binding arbitration process, which is intended to come into force from 25 March 2022. That arbitration process will be determined in accordance with the principles set out in the new Code of Practice. The window to apply for arbitration will be 6 months from the date the relevant legislation comes into force and the maximum time frame to repay arrears will be 24 months.

It seems that the Bill will only apply to commercial rent debts related to the mandated closure of certain businesses such as pubs, gyms and restaurants. Further, it seems that only those debts accrued during periods of mandated closure during the pandemic will be within its scope.

The Department for Business, Energy and Industrial Strategy will publish a list of approved arbitration bodies in due course.

These new laws will come into force in England and Wales. Northern Ireland will have a power in the Bill to introduce similar legislation.

Further, it has been announced that from today the government is also protecting commercial tenants from debt claims and bankruptcy petitions, issued against them in respect of rent arrears accrued during the pandemic. Again, it appears that this measure will only provide protection in respect of debts accumulated by certain businesses during periods of mandated closure. However, the precise scope of this aspect of the new legislation is, at present, unclear.

For further details on the new Bill, see https://www.gov.uk/government/news/new-laws-and-code-to-resolve-remaining-covid-19-commercial-rent-debts .

 

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