What is the Commercial Rent (Coronavirus) Bill?
We live in uncertain times and one thing that seems to be a constant is both the level of legislation introduced in the period since Coronavirus hit, and the considerable difficulties in handling debts in relation to commercial tenants who have been paying their rent during the pandemic. And given that there is an estimate £7bn commercial rent arrears that has built up during this period, this is a huge issue.
The latest change is the Commercial Rent (Coronavirus) Bill which has been introduced into the House of Commons on 9th November. If unamended and enacted, the law would have separate protected periods for England and Wales and an arbitration system for debts in connection with commercial property rents due in the protected periods.
In short, that means you could simply lose ALL of your unpaid rent. And this Bill is expected to apply to both England and Wales.
We always offer FREE initial phone advice with no strings attached. Call our highly experienced Property Dispute Resolution team on (01722) 422300 or FREEPHONE 0800 1404544.
Why the Commercial Rent (Coronavirus) Bill is so important – its impact on Landlords trying to recover their rent
The Bill could have a substantial impact if enacted as it could result in any debt during the protected period being determined by an arbitrator as unenforceable if certain criteria are met.
And the regulation is likely to be complex, and it’s supported by a new Code of Practice, which was published on 9 November 2021. This code applies to all commercial leases held by businesses which have accrued rent arrears, because of an inability to pay caused by the COVID-19 pandemic. This covers all commercial rent debts built up since March 2020.
The Bill really does bring in big changes. In reality, it allows arbitrators to effectively rewrite existing leases. Arbitrators can overall judges – forcing them to stay claims, overriding their judicial powers.
Landlords are being encouraged to reach negotiated settlements with tenants about any outstanding rent arrears – in place of court proceedings.
Does this affect only Rent due or does it include Service charges and insurance charges?
This would also include service charges and insurance charges together with other costs due under a commercial lease, such as management costs, should the bill go through unamended and the debt be one that is protected. (Part 1, Section 2(1),(2) & (3)).
What is meant by protected rent debt?
It is protected rent if the tenancy was adversely affected by coronavirus and the rent is attributable to a period of occupation by the tenant for a period during the protected period.(Part 1, Section 3(2))
What is the protected period?
A period starting in both England and Wales from 21 March 2020 and until the latest, for England 18th July 2021 and for Wales 7th August 2021.
The crucial importance of getting this right – how bad could this be for me?
If you get it wrong, you could entirely lose your right to 18 months rent. It’s a simple as that.
The arbitration scheme has certain criteria for a referral to be successful and to limit or reduce the debt or to delay payment by up to 2 years. If you are a commercial landlord and your tenant hasn’t been paying rent during the pandemic, it will be vital to put forward the right evidence to support your claim.
If you don’t produce the right evidence in the correct way, it could result in the arbitrator not awarding all of your rent or at worst, nothing at all during that period.
What’s more, from the day the act comes into effect, any commercial landlord who is owed these type of rent arrears will be prevented from using the usual debt recovery tools including the issue of debt proceedings, exercising of the right of forfeiture and draw-down of the tenant’s rent deposit.
Our commercial tenants not been not paying rent during the pandemic. What can I do next?
Don’t take any chances. Don’t delay.
It is still uncertain when the Bill will come into force,but it’s quite likely that if you’re swift, you still have time to instruct us and for us to get judgement, and your rent arrears paid for the outcomes into force.
But even if you are not able to do so, it will be absolutely essential that your case is properly argued to the arbitrator – to give you the maximum chance of getting your unpaid rent paid, and getting it paid swiftly.
So get the right legal advice by speaking to a lawyer who really specialises in this area. It’s surprising how few solicitors do. Our team includes a specialist property litigator with huge experience of commercial rent recovery.
We are always happy to provide initial phone advice to commercial landlords – and if you want to take the matter further, we will be happy to review your file and go through the next steps with you.
But what happens if I want to go ahead with arbitration?
Alternatively, you may be a Landlord with commercial tenants you both want to reach an agreement to enable you both parties to move forward with certainty.
If an arbitrator upon reviewing the evidence, concludes that you have both reached an agreement on the issue of unpaid commercial rent during the pandemic, they no choice but to dismiss any referral for arbitration. (Part 2, Section 13(2)).
If you’re looking to secure an agreement with your tenants – we can help. Just give us a call.
Who are these Arbitrator going to be?
Good question – but it’s still unclear. It appears that the Government is now preparing a register of arbitrators, and those arbitrators are expected to include surveyors and accountants.
Progress of the Commercial Rent (Coronavirus) Bill – watch this space
The information on this page is accurate as at January 12, 2022. The bill is still progressing through the Houses of Parliament and it may change as it follows through, which is another reason to obtain legal advice during these uncertain times. The bill was introduced on November 9, 2021 and as at January 12, 2022 it has passed the 2nd reading in the House of Commons and is now at the report stage.
Commercial tenants not paying rent during the pandemic? Looking for Specialist Solicitors? Call Now
Don’t risk losing 18 months worth of rent. If your tenants have been paying up, call our specialist commercial property disputes team today for a FREE no obligation initial phone chat about recovering that unpaid rent.
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