New law: Commercial landlords and tenants in England still resolving COVID-related rent arrears disputes need to act quickly under new time-limited laws

The new laws, and an accompanying Code of Practice, are only available to landlords and tenants until 24 September 2022.

They require landlords to make allowances for arrears of rent accrued for the period starting around 21 March 2021 and ending when the COVID restrictions applicable to the particular tenant’s industry sector were fully removed, and share their impact with the tenant – for example, by making an agreement with their tenant to waive part of the amount owing, or accepting a long-term repayment schedule.

If they fail to reach such an agreement, an automatic, legally binding arbitration procedure applies, presided over by approved private arbitrators.

Under the new rules the time limit for going to arbitration is six months. If that deadline is missed, the landlord’s usual remedies are resurrected, such as suing for rent, forfeiture, using the Commercial Rent Arrears Recovery process.

Applications for arbitration need to be made before 24 September, and the landlord and tenant must first have gone through a 28-day (or thereabouts) process of exchanging their respective proposals (with supporting information) as to how much and/or when arrears should be paid, with a view to reaching an agreement. So it is important to start the process as soon as possible, so that there is still time to initiate arbitration within the six-month period if they fail to reach agreement.

Operative date

• Now

Recommendation

• Commercial landlords should assess which arrears of rent owed to them are subject to the proposed new ringfencing and arbitration process, determine what outcome they want in relation to each relevant tenant, gather the evidence that will persuade the tenant or an arbitrator to agree to that outcome and proceed under the new rules.