The government has published its long-awaited Commercial Rent (Coronavirus) Bill (“the Bill”), which introduces an arbitration process (“the Arbitral Scheme”) for the resolution of rent arrears for mandated closures and restrictions (“Pandemic Arrears”). It has also issued a code of practice (“the Code”) to provide immediate guidance for the negotiation of a resolution and guidance for the Arbitral Scheme, which is expected to be introduced in March 2022.
Rent Recovery Statistics
According to British Chamber of Commerce survey data, by June 2021 77% of Pandemic Arrears had already been resolved via agreements between landlords and tenants. They were no doubt assisted by a voluntary code of practice for commercial property relationships, first issued on 19 June 2020. This figure increased marginally to 80% by November 2021.
14% of tenants refused to engage with landlords and others will have been unintentionally or deliberately dilatory in doing so. In any case, we expect most of those were subject to court proceedings which (unlike forfeitures, CRAR and insolvency action) the government did not legislate against.
Accordingly, the number of landlords and tenants that might need the Code or be subject to the Arbitral Scheme once the Bill passes should not be overstated.
However, those landlords and tenants face a new legal landscape.