Commercial Rent Arrears: Arbitration

Recovering rent arrears

The current restrictions placed upon commercial landlords for recovering rent arrears, accrued during the pandemic, are due to lift this month.

The Commercial Rent (Coronavirus) Bill (“the Bill”) is currently making its way through Parliament. This legislation is being introduced to deal with the rent arrears, and it is expected to receive Royal Assent by 25th March. The pandemic has had a significant impact on the hospitality and leisure sector, and a substantial amount of unpaid rent has accrued since the beginning of the pandemic.

The Bill introduces an arbitration scheme for arrears of rent that have built up during a period of forced closure due to the coronavirus pandemic. This is known as the ‘protected period’. The Government has also published draft guidance for arbitrators on the exercise of their functions under the Bill.

Co-operation between landlord and tenants

Landlords and tenants are encouraged to work together to find a solution in relation to the rent arrears, and arbitration should be a last resort. However, in the absence of an agreement, a landlord or tenant can make a referral to the arbitration scheme within six months of the Bill becoming law. The question of whether a tenant should be granted relief from payment will become a matter eligible for determination by an arbitrator.

The Bill provides for a strict timetable, and a landlord or tenant will need to be ready for matters to be referred to an arbitrator where they fall within the Bill. It is important to act quickly following the implementation of the Bill.

Here to help

If you have any more questions or would like more information regarding the Commercial Rent (Coronavirus) Bill, you can contact our Commercial Property Team below.