With the ending of Covid protections for tenants and the introduction of a new regime to resolve disputes between landlords and occupiers, March is set to be an important month for commercial property owners.

Since late March 2020, multiple restrictions have been placed on landlords’ ability to recover pandemic-induced rent arrears from their tenants.

While more commercial tenants are now paying their debts, many still have arrears dating back to the beginning of the first national lockdown two years ago.

To seek to resolve the apparent impasse reached between some landlords and tenants regarding such arrears, the government is scheduled to bring the Commercial Rent (Coronavirus) Bill into force from 25 March 2022. This will establish a legally-binding arbitration process to assist commercial landlords and tenants in resolving certain outstanding debts – encouraging collaboration, keeping disputes out of court and avoiding the time and costs of litigation.

The current situation
The Coronavirus Act 2020 initially gave a three-month moratorium on forfeiture of leases due to rent arrears in respect of commercial property. This was ultimately extended to 25 March 2022, alongside other restrictions on action by landlords to recover rent arrears e.g. via bailiff action under the CRAR process.

To promote a collaborative approach between parties, a voluntary code of practice was introduced by the government in June 2020 – encouraging landlords and tenants to mutually agree measures.

However, not all negotiations have been successful, which has led to new legislation being introduced to ring-fence arrears that have been built up while businesses were forced into temporary closure.