The government will legislate to ringfence rent debt accrued during the pandemic by businesses affected by enforced closures and set out a process of binding arbitration to be undertaken between landlords and tenants.
This is to be used as a last resort, after bilateral negotiations have been undertaken and only where landlords and tenants cannot otherwise come to a resolution. Ahead of the system being put in place, the government will publish the principles which they will seek to put into legislation in a revised Code of Practice, to allow landlords and tenants time to negotiate on that basis.
Section 82 (England and Wales) and Section 83 (Northern Ireland) of the Coronavirus Act 2020, which prevents landlords of commercial properties from being able to evict tenants for the non-payment of rent, will continue until 25 March 2022, unless legislation is passed ahead of this, to provide sufficient time for this new process to be put in place.
Government is clear that those tenants who have not been affected by closures and who have the means to pay, should pay. Additionally, government expects commercial tenants to begin paying rent as per their lease from the point of restrictions being lifted for their sector.
As soon as legislation is passed, the commercial tenant protection measures will only apply to ringfenced arrears. This includes rent debt accrued from March 2020 by commercial tenants affected by COVID-19 business closures until restrictions for their sector are removed.
This means that landlords will be able to evict tenants for the non-payment of rent prior to March 2020 and after the end of restrictions for their sector and who have not been affected by business closures during this period.
For the full policy statement see: Supporting businesses with commercial rent debts: policy statement – GOV.UK (www.gov.uk)
For more information and assistance for you and your business, contact Andy Pear or a member of the BM Advisory team.