The Commercial Rent (Coronavirus) Bill

If you are a Commercial Landlord with a tenant whose business was adversely affected by coronavirus, are you aware of The Commercial Rent (Coronavirus) Bill that is being passed at the beginning of next year? You can read all about the Bill, when it comes into effect and what it means for you as a Landlord below:

The Commercial Rent (Coronavirus) Bill, which the Government hope to pass on 25th March 2022 to follow on from the ending of the existing moratorium on forfeiture, commercial rent arrears recovery and issuing winding up petitions, which seeks to introduce legislation to establish a binding arbitration system to resolve disputes in respect of protected rent debts incurred by a tenant under a business tenancy which was adversely affected by coronavirus during the relevant period.

To decide whether the new rules will apply to you, you need an understanding of what constitutes “rent”, what is a “protected rent debt”, what does adversely affected by coronavirus mean and when the relevant period is.

“Rent” in relation to a business tenancy (a tenancy to which Part 2 of the Landlord and Tenant Act 1954 applies) means an amount consisting of one or more of the following:

1. an amount payable by the tenant for possession and use of the premises (whether described as rent or otherwise);
2. a service charge (including sums payable under the service charge for services, repairs, maintenance, improvement, insurance costs, management costs);
3. and/or interest on an unpaid amount of 1 or 2 above.

A “protected rent debt” is a debt under a business tenancy where:

1. the tenancy was “adversely affected by coronavirus” (where the whole or part of the business or the whole or part of the premises was subject to closure requirement imposed by coronavirus regulations for any “relevant period”); and
2. the rent is attributable to a period of occupation by the tenant for, or for a period within, the “relevant period” applied to the tenancy.

Relevant period means a period beginning at or after 2pm on 21st March 2020 and ending at or before:

1. 11.55pm on 18th July 2021, for business tenancies comprising premises in England; or
2. 6am on 7th August 2021 for business tenancies comprising premises in Wales.

Subject to the business and restriction

A requirement expressed as an obligation to close premises or parts of premises of a specified description every day at particular times is to be regarded as a closure requirement and it is immaterial that specific limited activities were (as an exception) allowed by the regulations to be carried on despite the obligation to close.

So, for example, unpaid rent or service charges for a business tenancy in respect of a nightclub, where those sums became payable after 21st March 2020 and before 19th July 2021 will be a protected rent debt and, if the parties cannot reach an agreement in relation to payment of the protected rent debt, either the tenant or the landlord can notify the other that the matter is to be referred to the statutory arbitration scheme, such reference to arbitration to be made within six months from the day the Act is passed.

For further Commerical Litigation advice, please contact our team on 01258 459361