Commercial Rent (Coronavirus) Bill introduced into Parliament

The Commercial Rent (Coronavirus) Bill was introduced in Parliament on 9 November 2021, along with a new Code of practice for commercial property relationships following the COVID-19 pandemic.

Subject to parliamentary approval, the government hopes to pass the Bill by 25 March 2022.

The Bill will introduce a statutory arbitration process (in England and Wales) for commercial landlords and tenants who have an outstanding dispute over rents. Any agreements entered into voluntarily before the Bill comes into force will not be affected. The provisions will only be applicable  to commercial rent arrears accrued while businesses were forced to close during the pandemic.

While statutory arbitration is in progress, the other remedies available to landlords will be temporarily unavailable, to give priority to the arbitration process. Landlords will therefore be unable to present:

• Winding-up petitions for protected rent debt during the moratorium period for statutory arbitration to take place.
• Bankruptcy petitions against individuals for protected rent debt where the statutory demand relied on was served (or, if an unsatisfied judgment is relied on, the claim was issued) on or after 10 November 2021

In addition:

• Where debt claims have been initiated on or after 10 November 2021 but before the Bill is in force, they will be stayed if one of the parties applies for a stay, to enable the matter to be resolved by statutory arbitration.
• Where judgment has been given in respect of a protected rent debt in that period, the matter may still be subject to statutory arbitration and enforcement will be stayed.
• Any bankruptcy order made on or after 10 November 2021, but before the Bill comes into force in respect of protected rent debt will be void.

The Code replaces the previous version, first published in June 2020, and is intended to align with the new legislation. It provides guidance on the arbitration process, the evidence that will be considered and the principles the arbitrator will apply.

These new provisions anticipate the volume of cases where some form of resolution will be required to manage the existing level of rent owed. Often landlords and tenants were able to reach a resolution to manage the problems caused by covid sometimes because of a lack of information about the tenants trading position. This meant that in many cases no agreement was possible, and the arrears have been parked whilst the moratorium was in place. The resolution of each case under these new provisions will be fact specific, but whether landlord or tenant, it will be very important to either seek or collate all the required evidence and submissions to ensure that, as far as possible, an acceptable outcome is obtained.

Written by : Mark Oakley (Partner).

If you would like guidance regarding these issues please email: moakley@judge-priestley.co.uk or call 020 8290 7337.