End of Covid-19 Compulsory Arbitration Scheme

On 24^th March 2022, the Commercial Rent (Coronavirus) Act 2022 (‘the Act’) became law in an attempt to resolve disputes between commercial landlords and tenants. It ringfenced rent arrears built up due to ‘mandated business closures’ during the COVID-19 pandemic i.e., sums that fell due between 21st March 2020 and 18th July 2021 (in England) or 21st March 2020 and 07th August 2021 (in Wales) to help protect businesses that were unable to pay their rent.

The Act introduced a binding arbitration (settlement) process aimed at resolving disputes relating to protected rent debts, where landlords and tenants had not been able to reach agreement on how those debts should be dealt with.

The act restricted the landlord’s ability to forfeit a lease for non-payment of rent for an initial period of 6 months, and regulations were subsequently produced that restricted the use of commercial rent arrears recovery (CRAR). Landlords were also unable to issue debt claims, including County Court Judgements (CCJs), High Court Judgements and bankruptcy petitions, in relation to the ringfenced arrears.

Parties were encouraged to reach an agreement by way of negotiation between themselves. The Act’s intention was to keep viable businesses running, albeit that tenants who could pay, should pay.

However, where parties were still unable to reach agreement, they had until 23 September 2022 to refer the dispute to the statutory arbitration scheme.

Now that 23 September has passed, all remaining restrictions on landlord’s enforcement options have been lifted. Landlords will therefore be able to pursue protected rent debts in the usual ways (such as forfeiture, for example), so long as the matter has not previously been referred to the statutory arbitration scheme.

The government had the ability to extend the 6-month window in the case of a protected rent under an English/ Welsh business tenancy, or both. However, no such regulations have been made.