Covid 19 - Resolving Commercial Debts arising out of the pandemic period

A policy statement has been issued today by the government clarifying the extension of the existing moratorium on commercial property evictions until 25 March 2022.The statement confirms that the extended period will provide time for government to legislate to ringfence Covid-related rent arrears and introduce a system of binding arbitration for landlords and tenants who cannot come to a negotiated settlement.

It should be noted that the statement confirms not all arrears will fall into the system only those affected by enforced closures, further it is to be used as a last resort, after bilateral negotiations have been undertaken and only where landlords and tenants cannot otherwise come to a resolution.

The intention is to publish the principles which will be put into legislation in a revised Code of Practice.

Within the statement is a summary of responses from the call to evidence earlier this year on how to deal with rent arrears accruing during the pandemic.

The statement provides some detail on the arbitration system stating:

“Once the new system is in place this will mean:

• landlords will be able to exercise their rights to evict any tenant for the non-payment of rent debt incurred prior to March 2020 and from the end of the ringfenced period

• the new legislation applies only to debt for tenants impacted by COVID-19 business closures. Landlords will be able to evict any tenant who falls outside the scope of arbitration legislation over the non-payment of rental arrears accrued at any time

• landlords will also be able to charge interest on rent incurred from the end of the ringfenced period onwards, if such interest payments are included in the terms of their lease”

The full statement can be accessed here: Resolving commercial rent arrears accumulated due to COVID-19