On Monday 7th March, Malcolm Niekirk held one of his popular Coffee Break Briefing Webinars.
In the webinar, Malcolm looked at rent arbitrations and the opportunities for insolvency practitioners for IBR (independent business review) work.
This is the summary from the presentation. If you’d like to watch it back, you can do so here. If not, read on for a summary.
(This article was written early in March 2022, looking ahead to the new law coming at the end of March 2022.)
A brief look at the current restrictions on the enforcement of landlord’s rights
These are going to be phased out soon
Forfeiture for rent arrears
- Currently not permitted for both legal proceedings and peaceable re-entry
- As of 26 March 2022, the landlord's rights to forfeiture will be re-instated
- These will be restricted by the new Act
Ban on bailiffs for commercial rent arrears recovery (CRAR)
- Until 25 March 2022
- Landlords can send bailiffs in only if more than 554 days in rent arrears
- That right will be phased back in from 25th March 2022.
Restrictions on winding up petitions for rent arrears
- Landlords have to prove extra elements to be entitled to present a petition.
- And that is going to change at the end of March 2022 as well.
The new rent arbitration scheme will run inside a less restrictive moratorium than the current one.
What is the Commercial Rent (Coronavirus) Act 2022)?
It suspends landlord's rights for another six months.
In that time, either the landlord or the tenant can go to arbitration to get a binding ruling on how much of the rent arrears the tenant is going to be legally obliged to pay.
During that six-month period rent arrears recovery action is still suspended
The six month period may be extended, depending on the economy and how successful the rent arbitration scheme is.
So, for insolvency practitioners, it will be an opportunity for new IBR work over at least six months, and possibly longer than that.
How are tenants protected under the Rent (Coronavirus) Act 2022)?
Tenants will be protected only if:
- The rent arrears are “protected rent” (unpaid rent for the “protected period”)
- And, the tenancy was adversely affected during Coronavirus
The protected period will depend on the type of business and how it was affected by government regulations.
A tenancy will only be treated as “adversely affected” if the business or part of it, or parts of the premises, were actually closed by government regulations during that time.
Take the case of a tenant who:
- Owes unpaid rent,
- For a business affected by Coronavirus,
- But where the unpaid rent does not cover the period when government regulations forced them to close.
That tenant won’t be protected by the new law.