New measures in Bill to assist commercial landlords and tenants in resolving rent debts resulting from the COVID-19 pandemic

The Department for Business, Energy, and Industrial Strategy, and the Department for Levelling up, Housing and Communities has announced the introduction of the Commercial Rent (Coronavirus) Bill into Parliament alongside a new code of practice.  Key points are:

  • The Bill will introduce a ringfence for rent debts built up as a result of mandated business closures during the pandemic whilst establishing a new binding arbitration process aimed at finding a proportionate solution which protects jobs, prevents further damage to the economy and enables a return to normal commercial relations.   
  • The code can be used by any business to help them negotiate and resolve rent disputes even if they fall outside of scope for arbitration, further details of this scope can be found within the code (link below).  
  • The government intends protected rent debts to be resolved by mutual agreement, or by the Bill’s arbitration system, which considers both parties’ circumstances in the exceptional context of the pandemic. The Bill, if passed, will allow a stay of any debt claims that include ringfenced debt and are issued between 10 November 2021 and the Bill coming into force. It would enable the ringfenced debt under these claims, and any County Court or High Court Judgements made in respect of such claims to be subject to arbitration. Any registration of such judgments for ringfenced debt may be cancelled following an arbitration award. The Bill, if passed, will prevent issue of debt claims including ringfenced debt until the end of the arbitration application period or the arbitration process.
  • The Bill, if passed, will also prevent a landlord from petitioning for bankruptcy of a business tenant such as a sole trader, based on non-payment of a statutory demand relating to any ringfenced debt served on or after 10 November 2021 and before the Bill comes into force. 
  • It will also prevent a petition based on a judgment debt if the claim was issued in this period. If a petition is presented or an order is made relying on such a petition in this period, the Bill provides for these to have no effect.
  • To provide the time to introduce and pass the legislation, the moratorium on forfeiture and restrictions on the use of Commercial Rent Arrears Recovery (CRAR) regime remain in place until 25 March 2022, unless legislation is passed ahead of this.  There are restrictions on presenting of winding-up petitions until 31 March 2022.

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