Arbitration process launched in bid to sort out commercial rent arrears

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A new law aims to help resolve disputes between commercial landlords and tenants over pandemic-related rent debts.

The Commercial Rent (Coronavirus) Act 2022 establishes a legally binding arbitration process for landlords and tenants in England and Wales who have not already reached an agreement. The law applies to protected rent debt – commercial rent debts of businesses including pubs, gyms and restaurants which had to close, in full or in part, from March 2020 until the date restrictions ended for their sector. Debts accrued at other times won’t be included.

Code of practice

Business Minister Paul Scully says it gives commercial tenants and landlords the ability to draw a line under uncertainty caused by the pandemic so they can plan ahead and return to normality. He adds: “Landlords and tenants should keep working together to reach their own agreements where possible using our Code of Practice to help them, and we’ve made arbitration available as a last resort. Tenants who can repay their rent debts in full should do so, and when they cannot, landlords should try to share the burden, so we can all move on.”

Eligible firms

The ban on commercial evictions and restrictions on Commercial Rent Arrears Recovery in England and Wales has now ended, but eligible firms will be protected for the next six months; during this period, those landlords will be unable to forfeit the lease, use commercial rent arrears recovery, or bring a debt claim to recover the protected debt.

Either party can apply for arbitration unilaterally, as a backstop after negotiations have failed. Arbitrators can award a reduction of protected rent debt and/or time to pay, with a maximum period to repay of 24 months.

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