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Commercial Rent (Coronavirus) Act 2022 now in place

25th March 2022

The Commercial Rent (Coronavirus) Act 2022 has put in place a new law designed to resolve remaining COVID-19 commercial rent debts.

The Act has received Royal Assent, meaning that from today a legally binding arbitration process will be available for eligible commercial landlords and tenants who have not already reached an agreement.

The Government believe this will help the market return to normal as quickly as possible.

The law applies to commercial rent debts of businesses including pubs, gyms and restaurants which were mandated to close, in full or in part, from March 2020 until the date restrictions ended for their sector.

Importantly, the Act ignores the suffering of commercial tenants in other affected property sectors.

Business Minister Paul Scully said:

“This new law will give commercial tenants and landlords the ability to draw a line under the uncertainty caused by the pandemic so they can plan ahead and return to normality.

“Landlords and tenants should keep working together to reach their own agreements where possible using our Code of Practice to help them, and we’ve made arbitration available as a last resort. Tenants who can repay their rent debts in full, should do so, and when they cannot, landlords should try to share the burden, so we can all move on.”

The Government has always encouraged commercial landlords and tenants to negotiate their own agreement where possible, so that an arrangement to resolve debt is mutually agreed, instead of resorting to the arbitration process.

Today is the last day of the general moratorium on commercial evictions and restrictions on Commercial Rent Arrears Recovery (CRAR) in England and Wales.

However, eligible firms remain protected for the next 6 months, during which arbitration can be applied for or until the conclusion of an arbitration.

For those tenancies that fall within scope of the Act and have failed to reach agreement, either party can apply for arbitration unilaterally, as a backstop after negotiations have failed.

Arbitrators may award a reduction of protected rent debt and/or time to pay, with a maximum period to repay of 24 months.

Parties are free to continue to negotiate outside of the legal arbitration process, and the Code of Practice signposts tenants and landlords to forms of alternative dispute resolution, such as mediation.

The legal arbitration process will be delivered by arbitrators appointed by approved arbitration bodies from a list of suitable and available arbitrators. The list of approved arbitration bodies can be found here.

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