The Commercial Rent (Coronavirus) Bill was introduced in Parliament on 9 November 2021, together with a new Code of Practice for commercial property relationships following the pandemic. The Government intends for the Bill to come into force by 25 March 2022, once approved by Parliament.

The Bill only applies to commercial rent arrears, including service charge and interest, accumulated whilst businesses were forced to close during the pandemic and provides a process of arbitration for commercial landlords and tenants in England and Wales to resolve any disputes or if the parties are unable to reach an agreement.

The remedies available to landlords will be temporarily unavailable and where debt claims have been commenced on or after 10 November 2021 but before the Bill is in force, they will be stayed if one party applies for a stay to enable the matter to be resolved by arbitration or negotiation. In the event Judgment has been obtained, the matter may still be subject to arbitration and, enforcement will be stayed.

Landlords will be unable to present Winding-Up petitions for protected rent debt during the moratorium period for arbitration to take place. Protected rent debt is rent due if the tenancy was adversely affected (premises which were closed) by the pandemic during the protected period (between 21 March 2020 and 18 July 2021). Bankruptcy Petitions against individuals also cannot be presented for protected rent debt where the statutory demand relied on was served on or after 10 November 2021 or if unsatisfied judgment, the claim was issued on or after 10 November 2021. If a Bankruptcy Order is made on or after 10 November 2021 and before the Bill comes into force, this will be void.

The arbitrator will be able to write off or defer (for up to 24 months) commercial rent arrears which relate to the protected period.

The Code of Practice which was first published in June 2020 and updated in April 2021 provides guidance for parties in relation to negotiations regarding rent arrears that accrued during the pandemic. The Code provides guidance on the arbitration process, the evidence that will be considered and the principles the arbitrator will apply.

The Bill will shortly come in force, however, landlords and tenants should start preparing now in seeking to enter negotiations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.