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Government announces further details of pandemic debt arbitration scheme

9th November 2021

Today the Government has announced further details about its proposed pandemic debt arbitration scheme, including a draft bill and an updated Code of Practice.

Commercial tenants will continue to be protected from eviction by the Government’s moratorium, which was extended to 25 March 2022, unless legislation is passed ahead of this.

This provides time for landlords and tenants to negotiate over built up pandemic debt arrears.

From tomorrow, to align with the legislation, the Government is also issuing a Notice on County Court Judgements (CCJs), High Court Judgements (HCJs) and bankruptcy petitions issued against tenants in relation to rent arrears accrued during the pandemic.

This means tenants who are in scope (and their guarantors in the case of bankruptcy petitions) will receive protection from these actions.

Following Royal Assent of the Commercial Rent (Coronavirus) Bill, the new laws will come into force in England and Wales. Northern Ireland will have a power in the Bill to introduce similar legislation to address pandemic debt.

These laws apply to commercial rent debts accrued by businesses that were mandated to close, either in full or in part, from March 2020 until the date restrictions were lifted for their sector. Debts accrued at other times will not be in scope.

For those businesses in scope, legislation establishes a legally binding arbitration process for commercial landlords and tenants who have not already reached an agreement. The arbitration process will follow the principles set out in the revised Code of Practice.

The result of the arbitration process will be a legally binding agreement that the landlord and tenant must adhere to, resolving rent disputes and helping the market return to normal as quickly as possible.

However, the government still encourages both landlords and tenants to try and negotiate their own agreement wherever possible, treating the arbitration process as a last resort.

Tenants and landlords will have six months, from the date the legislation comes into force on the 25th March 2022, to apply for arbitration and will have a maximum time frame of 24 months to repay the agreed amounts determined by the independent arbitrator.

The CTA is able to offer assistance to tenants struggling under their pandemic debt arrears.

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