New laws introduced to resolve Covid-19 rent debt

The government is preparing to introduce new laws and a Code of Practice to resolve the remaining commercial rent debts accrued throughout the pandemic, announced busiess secretary Kwasi Kwarteng yesterday (9 November). 

"Today's measures provide commercial landlords and tenants with the clarity and certainty they need to plan ahead and recover from the pandemic," said Kwarteng yesterday. 

"We encourage landlords and tenants to keep working together to reach their own agreements ahead of the new laws coming into place, and we expect tenants capable of paying rent to do so."

Last year, ministers took action to protect jobs when lockdown forced some businesses to close either in part or in full, meaning commercial tenants are protected from eviction until 25 March 2022. The intention was to give landlords and tenants time to negotiate how to share the cost of commercial rent debts acquired. 

As of yesterday, the negotiations are underpinned by a new Code of Practice, giving both landlords and tenants a clear procedure to follow to settle outstanding funds ahead of the new arbitration process coming into play. 

The Code states that, in the first instance, tenants who are not able to pay in full should negotiate with the landlord in the hopes they waive some or all of the arrears where they are able to do so. 

The new Commercial Rent (Coronavirus) Bill, also introduced in parliament yesterday, will establish a legally-binding arbitration process for commercial landlords and tenants who have not already reached an agreement. Subject to parliamentary passage, this will come into force in March next year. 

The Bill will apply to commercial rent debts linked to the enforced closure of venues such as restaurants, pubs and gyms. Debts accrued at other times will not be in scope. 

From today (10 November), the government is also protecting commercial tenants from debt claims, including County Court Judgements (CCJs), High Court Judgements (HCJs) and bankruptcy petitions issued against them in relation to pandemic rent arrears. 

Kate Nicholls OBE, CEO of UKHospitality, says the industry trade association welcomes the updated Code of Practice, stating that the emphasis on ongoing negotiation to "share the burden of the impact of lockdowns" is vital. 

"It is in the long-term interests of landlords and tenants to come together and find the solutions that ensure business survival and that do not undermine the economic recovery," adds Nicholls. 


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