Written by Elizabeth Sam, Conveyancing Paralegal in the Real Estate team at Rooks Rider Solicitors.
Coronavirus Rent Arrears: The ‘Commercial Rent (Coronavirus) Act 2022’ received Royal Assent on 24 March 2022. This means that a legally binding arbitration process is now available for eligible commercial landlords and tenants who have not reached an agreement on pandemic-related rent debt.
The law applies to commercial rent debts of businesses which were instructed to close from March 2020 until the date restrictions ended for their sector i.e. Non-essential Retail and Leisure 21/03/20 – 12/04/21, Garden Centres 21/03/20 – 13/05/20, Hospitality and Nightclubs 21/03/20 – 18/07/21 (dates are slightly different for Welsh properties). Debts accrued at other times are not covered.
From 26 March 2022 Commercial Rent Arrears Recovery (CRAR) goes back to the pre-pandemic level of 7 days’ rent arrears, with eligible firms remaining protected for the next 6 months during which arbitration can be applied for or until the conclusion of an arbitration. The arbitration process is currently only available for a 6 month period so an application for arbitration must be made by 24 September 2022.
The right to forfeit leases for non-payment of rent also resumed on 26 March 2022 with the usual grace period of 14 or 21 days still applicable. It is now possible to forfeit leases for any Christmas Day 2021 rent, but it is not possible to forfeit any Lady Day 2022 rent leases until after the grace period. Demanding or accepting Lady Day 2022 rent, or exercising CRAR will waive the right to forfeit all earlier unpaid rent. Landlords may wish to consider a rent stop to avoid unintentional waiver.
Form 1 April 2022, landlords can serve statutory demands and winding-up petitions against tenants who owe undisputed debits of more than £750.
For more information, please contact Nicola Stewart, Senior Associate in our Dispute Resolution team at Rooks Rider Solicitors.
