We recently posted an article looking at the shift from alternative to mandatory dispute resolution and commented on the provisions of the Government Guidance on contractual behaviour in the enforcement of contracts impacted by the Covid-19 emergency, which encouraged negotiation and mediation as methods of resolving disputes.
This month, the Government has released its policy statement setting out how rent arrears relating to the pandemic period should be treated. The key points to take from the policy are:
Landlords | Tenants |
Negotiate. NB Landlords who wish to consider forfeiture action (as referred to below) should approach negotiations with care/seek legal advice before negotiating. Negotiations are likely to constitute a waiver of the right to forfeit. |
Negotiate. |
Sue for all outstanding arrears on the basis that legislation for ring-fencing has not yet been introduced. However, landlords should be aware that there may be costs consequences in relation to such action – particularly where there has not been a bona fide attempt to negotiate. |
If pursued for all arrears:
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Sue for arrears relating to pre-pandemic and/or post lifting of restrictions. | Advise landlord that any rent payments must be allocated to arrears that are unlikely to be ring-fenced. |
Forfeit for non-monetary breaches. | |
Forfeit for non-ring fenced arrears after 25 March 2022. | |
Serve a statutory demand/winding-up petition after 30 September 2021. |
In summary, it is clear that landlords and tenants are expected to work together to resolve rent arrears disputes without recourse to the court process. A failure to do so is likely to involve significant costs penalties. That said, tenants are expected to meet rental liabilities going forwards given that all restrictions have now been lifted.
If you would like more information regarding alternative dispute resolution and pandemic rent arrears and how we can help, you can get in touch with our Property Litigation Team on 0161 941 4000 or email the Property Litigation Team.