Commercial Rent (Coronavirus) Act
By Sharon Mathieson, Ward Hadaway
As we all know, throughout the COVID-19 pandemic, a vast number of businesses encountered various enforced closures of their premises as a result of government imposed restrictions. In many instances this led to commercial tenants being unable to operate and, in turn, to arrears in rent and other sums payable by tenants to their landlords under their leases.
In addition, commercial landlords were prevented from taking action against their commercial tenants for non-payment, with forfeiture and insolvency proceedings placed on hold, as well as restrictions placed on their ability to use the Commercial Rent Arrears Recovery (CRAR) and debt proceedings generally (although interestingly a number of cases have been heard before the Court of Appeal to consider a landlord’s ability to recover commercial rent arrears during the Covid 19 pandemic period – the decisions of which remain outstanding). These restrictions were lifted on 24 March 2022 and were replaced, in part, by the Commercial Rent (Coronavirus) Act.
What is the purpose of the Commercial Rent (Coronavirus) Act?
The Commercial Rent (Coronavirus) Act introduces a binding arbitration service where landlords and tenants of business tenancies have been unable to reach agreement on non-payment of arrears. The objective of the Act is said to preserve the viability of a tenant’s business whilst protecting the solvency of the landlord. Importantly, arbitrators are granted powers to write off arrears completely or defer payment of arrears for 24 months and, in reaching their decisions, arbitrators are required to follow a Code of Practice attached to the Act.
Why is this important?
It is essential that both landlords and tenants are aware of the changes to the remedies available for non-payment of rent and that they quickly consider whether any particular arrears fall to be dealt with under the arbitration scheme or will fall back to being dealt with under the usual landlord remedies.
Sharon MathiesonGGI member firm
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Newcastle upon Tyne, Leeds, Manchester, UK
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Ward Hadaway is one of the largest fullservice law firms in the North of England, with a reputation for quality, innovation, and a practical approach to meeting their clients’ needs. With 90+ partners and over 450 staff, the firm’s approach is partner-led relationships with all clients, supported by a resource that has real strength in depth.
Sharon Mathieson is a Partner in Ward Hadaway’s Property Litigation team, acting for a wealth of clients across various sectors. Sharon was awarded the accolade of being a leading individual for property litigation in the latest Legal 500 national listings.
Published: Real Estate Newsletter, No. 14, Summer 2022 l Photo: scaliger - stock.adobe.com