Certain prohibitions remain in place in England, Wales and Northern Ireland for the recovery of commercial rent arrears accrued during the pandemic. The British Property Federation estimates this figure (to end of June 2021) to be £7.5billion. The government has now published its policy statement for supporting businesses with commercial rent debts. In it, these arrears are to be ringfenced; and legislation setting out a binding arbitration process between landlords and tenants is to be introduced. The government's hope with this legislation is to trigger a return to 'business as usual'.
New legislation: Points to note for landlords and tenants:
- A revised Code of Practice for commercial relationships is to be introduced.
- Arbitration is to be used as a last resort.
- The arbitrator will be able to make costs awards. However, the costs of arbitration are to be shared equally if the parties have acted in good faith during negotiations.
- The date for arrears prohibitions to end – currently 25 March 2022 – might change.
- Tenants not affected by the pandemic are required to pay.
- Tenants are to pay rent following restrictions being lifted for their sector.
- Contractual interest will accrue once more, on arrears due from the end of the ringfenced period.
- Landlords will be able to exercise their rights to evict a tenant for non-payment of arrears accrued prior to March 2020 and from the end of the ringfenced period.
- Landlords will be able to evict a tenant not impacted by the pandemic for non-payment of arrears accrued at any time.
- Landlords will be able to evict a tenant for breaches other than arrears (such as property damage).
If you have any concerns or questions about rent arrears or how this new legislation and binding arbitration may impact you or your business, please do not hesitate to get in touch with our Real Estate Disputes team or your usual Brodies' contact.
Contributor
Lucie Barnes
Partner
