Law to resolve Covid commercial rent debts comes into effect

A new law to resolve commercial rent debts accrued because of the pandemic has now come into effect.

Carly Davies, our Debt Control Manager, provides an update.

The Commercial Rent (Coronavirus) Act 2022 provides a legally binding arbitration process for eligible commercial landlords and tenants who have not already reached an agreement.  

It’s designed to resolve disputes about certain pandemic-related rent debt and help the market return to normal as quickly as possible. 

The law applies to commercial rent debts of businesses including pubs, gyms and restaurants which were mandated to close, in full or in part, from March 2020 until the date restrictions ended for their sector. 

Debts accrued at other times will not be included. 

Business Minister Paul Scully said: “This new law will give commercial tenants and landlords the ability to draw a line under the uncertainty caused by the pandemic so they can plan ahead and return to normality. 

“Landlords and tenants should keep working together to reach their own agreements where possible using our Code of Practice to help them, and we’ve made arbitration available as a last resort. Tenants who can repay their rent debts in full, should do so, and when they cannot, landlords should try to share the burden, so we can all move on. 

“The government encourages commercial landlords and tenants to negotiate their own agreement where possible, so that an arrangement to resolve debt is mutually agreed, instead of resorting to the arbitration process.” 

The general moratorium on commercial evictions and restrictions on Commercial Rent Arrears Recovery (CRAR) has now ended, but eligible firms remain protected for the next 6 months during which arbitration can be applied for or until the conclusion of an arbitration. 

The moratorium has provided firms with breathing space to negotiate how to address the cost of commercial rent debts caused by the pandemic before the new law came into place. 

The ‘Commercial Rent (Coronavirus) Act’ applies to England and Wales. The legal arbitration process will be delivered by arbitrators appointed by approved arbitration bodies from a list of suitable and available arbitrators. 

If you would like more information about the update in this article please contact Carly on 01228 516666 or click here to send her an email.