Since the start of the pandemic, landlords have faced a number of obstacles put in place by Government to prevent them seeking to enforce non-payment of sums due, in respect of commercial tenancies. Fortunately for landlords, there is now light at the end of the tunnel.
The prohibition on the use of forfeiture and commercial rent arrears recovery (CRAR) lapsed on 25 March and the blanket prohibition on winding up action against tenants under business tenancies also ended on 31 March 2022. So what now for tenants with large historic debts? Enter new legislation aimed at tackling the backlog of rent arrears accrued during the pandemic: The Commercial Rent (Coronavirus) Bill (the “Bill”), which received Royal Assent and came into effect on 25 March 2022.
What protection does the new legislation offer for tenants?
Tenants will be relieved to learn that the Bill provides ongoing (albeit more limited) protection for certain debts which accrued during periods of coronavirus-related closure. This “protected rent debt” will be ringfenced to prevent landlord enforcement action. However, this protection is much more limited in nature - “protected rent debt” is strictly limited to rents which fell due when different types of business were forced to close between 21 March 2020 and 18 July 2021 (in England) or 7 August 2021 (in Wales). A summary of all the ring-fenced periods are set out in Annex A of the Practice Code, which accompanies the new legislation; for non-essential retailers in England the relevant period ended sooner on 12 April 2021, when non-essential retail was allowed to re-open.
What does this mean for landlords?
There is now a six month moratorium period preventing forfeiture, winding-up, CRAR, and drawing on rent deposits for protected rent debts only. Any ongoing debt proceedings in relation to protected rent debt can also be stayed until the arbitration has run its course.