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The End of Commercial Tenant Protection Measures?

The Coronavirus Act 2020 and the Corporate Insolvency and Governance Act 2020 introduced legislation and procedural measures which significantly curbed the rights of Commercial Landlords during the pandemic.

The current:

  • prohibition on the right of re-entry or forfeiture of business tenancies in England and Wales on the grounds of non-payment of rent;
  • requirement of the Court to disregard failure to pay rent while restrictions on forfeiture are in force when determine whether the landlord is entitled to oppose the grant of a new lease under ground (b) of section 30(1) of the Landlord and Tenant Act;
  • the increase on the minimum net unpaid rent that must be outstanding before the commercial rent arrears recovery (CRAR) procedure;

are all expected to end 25 March 2022, unless there are further extensions to the Coronavirus Act 2020 and the Corporate Insolvency and Governance Act 2020, giving back landlords the rights that were removed during the pandemic.  The restrictions on presenting winding-up petitions for debts under £10,000 and for debt in respect of commercial tenancies that is unpaid by reason of “a financial effect” of coronavirus are in place until 31 March 2022.

Commercial Landlords should not forget the Commercial Rents (Coronavirus) Bill however, which proposes to introduce a “ringfence” for rent debts built up during mandated business closures during the pandemic.  Since the Bill was published in November last year, Commercial Landlords have in effect been unable to pursue Tenants for unpaid rent which accrued during the pandemic.  The Bill is currently in the Final Stages where amendments proposed by the House of Lords are being considered by the first House.  The Bill includes a binding Arbitration process to help Landlords and Tenants to reach resolutions of Covid-19 related rent debt.  It remains to be seen whether the Bill will be a damp squib, as those Landlords and Tenants who faced hardship may have already reached a resolution, ended their relationship or pursued remedies in the County Court or High Court.  That said, there is the prospect of judgments made by such Courts being subject to Arbitration and the cancellation of the registration of such judgments following an Arbitration award.  For debts outside the scope of the arbitration process, Landlords will be able to exercise their usual remedies as they did before the pandemic.

If you are a Commercial Landlord or Tenant requiring advice in relation to rent debt (including insurance and service charge) accrued during or outside the pandemic, please get in touch and our Commercial Property Litigation Team will be happy to assist.