23 Nov 2021

BEIS questions answered on rental debt moratorium

Following a meeting with the BEIS yesterday, a number of questions were answered regarding the Bill to assist commercial landlords and tenants in resolving rent debts resulting from the COVID-19 pandemic.

What happens to CCJs initiated before 10 November?

These are outside the scope of protection, and so landlords may continue to use them to recoup arrears from tenants.

What tenancies are in scope?

Any business tenancy as defined in the Landlord & Tenant Act 1954, even if it has contracted out of the Act.

What tenant protections lapse after March 2022?

Protection against forfeiture and CRAR lapse after 25 March, and for Statutory Demands leading to Winding Up Petitions on 31 March. However, if the rent is 'protected' (i.e. fell due between March 2020 and April 2021 for retailers) then protection carries forward until the sooner of either six months or the end of the arbitration process.

What happens if neither side in arbitration puts forward a proposal that is consistent with the principles that govern arbitration?

The arbitrator has the freedom to award between 0-100% relief for the protected rent being arbitrated, payable between 0-24 months from the date of the decision. No other flexibility applies.

How do we ensure arbitrator impartiality?

The Bill makes provision for the independence of arbitrators - if any are acting improperly or with bias, they may be removed and replaced.

At what point is tenant viability assessed? And what if the tenant has multiple cases going through arbitration?

Tenant viability is assessed as of the date the arbitrator is undertaking the assessment - it is not backdated. If a number of properties have rent arrears, an arbitrator will take these into account as liabilities and make an assessment of business viability accordingly.

The Commercial Rent Bill is currently going through parliament and so the above may change depending on what amendments, if any, are made to it. The Bill receives its second reading in the Commons tomorrow (Wednesday 24th November).

Additional News

Bira welcomes new laws and code to resolve remaining COVID-19 commercial rent debts

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