Commercial Rent Arrears
13 May 2022 | Business

Commercial Rent Arrears Update

It is hard to forget the restrictions that we all faced from March 2020 as a result of the pandemic.

One specific to commercial landlords was the prohibition from forfeiting leases for non-payment of rent. This was the case until 24 March 2022 when that restriction ended. Many commercial landlords will now be keen to pursue tenants for arrears and weighing up the options available to them. Before they do that though, they will need to consider the recently enacted Commercial Rent (Coronavirus) Act 2022.

Commercial landlords can once again forfeit leases for non-payment of rent but only if the rent arrears arose outside of what is defined as the “protected period” under the 2022 Act. The protected period runs from March 2020 until the date that restrictions ended for the sector in which the business tenant operates.

The 2022 Act provides a new process whereby any dispute arising from rent arrears accrued during the protected period must be dealt with under a newly established binding arbitration scheme. Commercial landlords won’t be able to exercise the other options available to them (such as issuing court proceedings, forfeiture for non-payment or presenting a winding up petition) until either the arbitration is concluded or if no application to arbitration is made, until 25 September 2022.

The aim of the 2022 Act is to preserve the commercial tenant’s business in so far as that is consistent with preserving the commercial landlord’s solvency.

Debts which aren’t protected rent debts can be pursued in the normal pre-Covid restriction way by commercial landlords. Commercial landlords need to be careful to make it clear which arrears are being pursued if the tenant has both protected and unprotected rent arrears.

If you require any advice and assistance in respect of anything discussed in this article, then please contact us on 0161 877 8555 and a member of our team will be on hand to assist.

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