A new law is now in place to help resolve certain remaining commercial rent debts accrued because of the pandemic, Business Minister Paul Scully has announced.
The ‘Commercial Rent (Coronavirus) Act 2022’ received Royal Assent today (March 24). This means that a legally binding arbitration process will be available for eligible commercial landlords and tenants who have not already reached an agreement. This will 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 in scope.
The law comes into force today in England and Wales.
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.”
March 24 was the last day of the general moratorium on commercial evictions and restrictions on Commercial Rent Arrears Recovery (CRAR) in England and Wales, 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.
These are very welcome new laws for the hospitality industry: the Commercial Rent (Coronavirus) Bill is decisive Government legislation to deal with the £7bn-plus rent debt accrued during the pandemic by businesses across all sectors. And as our sector tries to recover, it’s imperative that rent debt is dealt with, otherwise it’ll hamstring our recovery.
UKHospitality Chief Executive Kate Nicholls said:
“UKHospitality will produce detailed guidance for webinars on how tenants should approach the arbitration process, and we’ll be urging arbitrators that they should be seeking to preserve businesses and jobs, which will of course be vital to the hospitality sector’s efforts to lead the UK’s post-Covid economic recovery. At the same time, landlords should take a pragmatic approach to the arbitration process.
“We’re also encouraging affected businesses to complete the Department for Business, Energy and Industrial Strategy’s (BEIS) rent survey, which seeks to ensure that the views of businesses are ‘heard and taken into account’. It can be accessed here.”