Frettens’ own ‘Insolvency Guru’ Malcolm Niekirk recently provided his update on understanding rent arbitrations for insolvency practitioners.
In this article, Property Litigation specialist Will Bartley provides advice on the impact of the Commercial Rent (Coronavirus) Act 2022 to landlords and tenants.
He goes on to discuss how the Act will manage commercial rent arbitration moving forward.
What is the Commercial Rent (Coronavirus) Act 2022?
The Act has been implemented and from 25th March 2022 it will govern how the majority of commercial landlord and tenant disputes will be determined over the next 6 months.
This includes:
- Rent arrears
- Forfeiture
The Act applies to all business tenancies as defined in the Landlord and Tenant Act 1954.
Why has the Commercial Rent (Coronavirus) Act been put in place?
Due to the financial impact of Covid-19, previous legislation was implemented in March 2020 by the Government to prevent recovery of certain commercial rent arrears and to prevent some forms of commercial forfeiture during the Pandemic.
The Government has now seen fit to implement the Commercial Rent (Coronavirus) Act 2022 as a means of moving forward for both landlords and tenants.
What does the Commercial Rent (Coronavirus) Act 2022 do?
The Act sets out how a new rent arbitration process will assess and determine how the respective parties should proceed.
The arbitration process is open for 6 months from the implementation of the Act, taking it up until 24th September.
Who is eligible for the arbitration process?
The landlord or tenant can serve on the other a letter of notification, setting out their proposal and requesting the other side’s agreement.
If this is not accepted, either the landlord or the tenant can then refer the matter to the Arbitrator for a determination during the 6 month applicable period.
If neither party does this, the arbitration provision from the Act falls away, and the usual previous remedies from pre-Coronavirus will be available to the parties from 25th September onwards.
Upon receipt of an arbitration request, the Arbitrator will consider the circumstances of both the landlord and the tenant in the context of the pandemic when making their award.
What is the protected rent period for rent arbitration?
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