As the economy emerges from the lockdowns in 2020 and 2021 and the impact they had on businesses and the property sector, the Government has introduced the Commercial Rent (Coronavirus) Bill to Parliament on 9 November 2021. This Bill was also accompanied by a new code of practice for commercial property relationships. The Act should pass through the Parliamentary system by the end of March 2022.

The Bill is designed to address commercial rent arrears that were accrued where a business was forced to close because of the effects of, or legislation associated with the COVID-19 pandemic. The intention is to introduce a statutory arbitration process for landlords and tenants in England and Wales, within the commercial property sector, to deal with rent arrears disputes. This legislation does not affect those who have already voluntarily entered into an agreement on rent arrears.

If the Bill becomes law, then when statutory arbitration is in progress other possible remedies available to landlords will be temporarily unavailable. Though the Bill will not affect existing repayment agreements, if a debt claim has been initiated on or after 10 November 2021 but before the Bill is in force, the claim will be put on hold if one of the parties requests it, to enable the matter to be resolved by statutory arbitration or otherwise once the Bill has been passed.

The Bill will effectively prevent Landlords from being able to do the following:

  • Issue winding-up petitions for protected rent debt during the moratorium period for statutory arbitration to take place.
  • Issue bankruptcy petitions against individuals for protected rent debt where the statutory demand relied on was served on or after 10 November 2021.

The new code of practice replaces the ‘Code of Practice for Commercial Property Relationships During the COVID-19 Pandemic’, which provided guidance on how landlords and tenants should approach negotiation regarding rent arrears that were accrued during the pandemic. The new code provides guidance on the arbitration process, the evidence that will be considered and the principles the arbitrator will apply under the new provisions of the Commercial Rent (Coronavirus) Bill.

If you require legal advice on a Commercial Property or Dispute Resolution matter, contact rhw’s legal team on guildford@rhw.co.uk or call 01483 302000. Advice that comes from experienced and commercially aware legal experts.