March 2020 saw the mandatory closure of many businesses as the country entered its first lockdown. In response, the government introduced measures to allow viable businesses to survive and help with rent arrears. These were restrictions on:
- Landlords forfeiting business leases
- Using the statutory Commercial Rent Arrears Recovery procedure
- Presenting winding-up petitions.
The Treasury estimates that commercial rent arrears of around £9bn will have accrued by March 2022 when these temporary restrictions measures are due to expire.
The Commercial Rent (Coronavirus) Bill 2021-22 is currently passing through parliament and seeks to introduce, in March 2022 a binding arbitration system to resolve disputes where landlords and tenants cannot agree on a solution.
It is proposed that the arbitrator will have wide discretion in making their award including the ability to write off any debt. Any award should be aimed at restoring or preserving “the viability of the business of the tenant, so far as that is consistent with preserving the landlord’s solvency”.
Interested parties with relevant expertise or a special interest have been requested to submit their views on the proposals as soon as possible to the committee which sits from 7 December. For further details of the proposals and how to submit evidence click here.
If you are a landlord or tenant requiring legal assistance to help navigate the challenges arising from the pandemic, please contact one of our real estate dispute resolution team.