Covid commercial rent arrears – changes from 24th March 2022

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By AMD Solicitors

The Commercial Rent (Coronavirus) Act 2022 received Royal Assent on 24^th March 2022. It brings to an end restrictions on recovery of commercial rents, and introduces a new binding arbitration process to assist landlords and tenants in resolving rent arrears.

Landlords can now forfeit a lease for non-payment of rent

Most importantly, with some small exceptions, the blanket ban on forfeiture of a lease on non-payment of rent is now over. Landlords can now pursue all available remedies for non-protected rent debts. This applies to commercial rent debts of businesses which were mandated to close in part or in full from March 2020. In light of this, it is important to note that landlords should act fast in response to non-payment of rent by their tenants. Landlords may lose their right to forfeit the lease for non-payment of rent if they allow the lease to continue.

New binding arbitration process

The Act also introduces a new binding arbitration process, which aims to allow landlords and tenants to resolve out of court any outstanding commercial rent debts which arose as a result of mandatory closing of businesses. Landlords and Tenants are encouraged to negotiate their own agreement where possible, and the arbitration process will allow parties to try to resolve arrears without referring the matter to Court. The arbitration process is compulsory, and landlord will not be able to issue a debt claim in Court until the end of the arbitration application period or the arbitration process. Viability of the tenant’s business will be considered throughout the process, in attempt to reach an equilibrium between recovering the debt due to the landlord, and allowing a business to return back to pre-COVID levels of profitability.

Restrictions on instituting winding-up proceedings removed

Furthermore, from 31^st March, restrictions on serving statutory demands to institute winding up proceedings for unpaid rents will end.

If you wish to discuss your commercial property requirements with Helen Brewer, head of Commercial Property, please get in touch by email at helenbrewer@amdsolicitors.com or by telephone on 0117 973 5647.

This article is provided for general information purposes only and represents our understanding of the relevant law and practice as at the date of uploading. This article should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.