The bill proposed a new binding arbitration process to help Landlords and Tenants find a solution to rent related debt that has accrued as a result of businesses being forced to close during the Covid-19 pandemic.
The current restrictions in place for commercial landlords to recover rent arrears from their tenants include the prohibition on exercising the right of forfeiture (which is in place until 25 March 2022) and the use of CRAR (Commercial Rent Arrears Recovery). Landlords can still issue debt claims against a tenant for unpaid rent however the new Bill will put a ringfence around those rent arrears that were built up as a result of businesses having to close during the Covid-19 pandemic. The Bill will also prohibit Landlords from using any recovery method in respect of the ring-fenced arrears, such as making a debt claim at court, using CRAR or using the right of forfeiture.
The Bill will only apply if the following 3 criteria are met:
The first course of action to settle rent debts between Landlords and Tenants is for the parties to try and resolve the dispute between themselves. If that does not prove successful then once the Bill comes into force, the Landlord will be restricted to only using the arbitration method to recover unpaid rent arrears from “the relevant period”.
In addition, any claims for unpaid rent arrears during the relevant period that were made between 10 November 2021 and from when the Bill comes into force, will be automatically stayed. Landlords will also not be able to issue any debt claims for unpaid rent arrears from the relevant period until the arbitration period ends.
The purpose of the Bill is to narrow the process as to how Landlords recover unpaid rent arrears from the relevant period and to try and force those disputes to be resolved between the Landlord and Tenant. The Bill is currently at the “report stage” in the House of Lords and is likely to become law within the next few weeks.
For more information and legal advice on how the Commercial Rent (Coronavirus) Bill will impact on your options to recover unpaid rent , please contact either Natasha Wright on 0113 280 2227, Liz Henwood on 0114 228 3276 or Claire Moss on 0113 280 2089.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.