Rent Arrears Protection For Commercial Tenants Under Review
As the Country entered lockdown in March 2020, the Government introduced various measures in response to the COVID-19 pandemic, which gave commercial tenants a number of temporary protections to assist them during the pandemic.
Including a suspension on taking possession of premises from tenants based on forfeiture for non-payment of rent, restrictions on the use of the statutory Commercial Rent Arrears Recovery scheme (CRAR) and the use of statutory demands to prevent landlords from presenting winding-up petitions. These temporary protections have been extended several times and are now, set to expire on 30 June 2021.
The country finds its self gradually releasing from lockdown and the 30 June now in clear sight, the Government has issued a Call for Evidence in the form of a Consultation, to support its decision making on how to withdraw or replace the legislative protections afforded to tenants, whilst at the same time preserving tenant businesses. It is the aim of the Consultation to understand how parties, including tenants, landlords, lenders and investors are responding to the accumulation of rent arrears that have occurred as a result of the pandemic.
The Government also wants to learn more about how landlords and tenants have sustained an interim position on the payment of rent as well as compliance with other lease covenants. The use of the voluntary Code of Practice for the commercial property sector, which was introduced in June 2020, will also be considered.
The Consultation will be conducted by way of an online questionnaire. The primary focus is commercial property evictions and CRAR.
The various options for consideration under the Consultation are as follows:
- allow all of the current protections in place to expire on 30 June 2021;
- allow the moratorium on the use of forfeiture to expire on 30 June 2021, however retain the protections against insolvency and the restrictions on the use of CRAR;
- afford extra “protection” for businesses most affected by COVID-19, such as the hospitality sector, but restore landlords’ powers to pursue recovery of arrears in sectors that have been less affected;
- encourage formal mediation between landlords and tenants to resolve disputes;
- introduce a non-binding adjudication scheme, and
- introduce a binding non-judicial adjudication scheme.
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About the author
Senior litigation executive and manager
Iain is a senior litigation executive and manager of Athena Debt Recovery which is part of the firm’s commercial litigation department supervised by our head of commercial litigation partner Stephen Boyd.
Iain has over 28 years experience in Commercial Debt Recovery having worked in both Private Practice and Industry and has extensive experience working across all industry sectors, and has a particular expertise in working with Insolvency Practitioners in advising and recovering outstanding insolvent company ledgers.
Iain brings a pragmatic and commercial approach to recovering debts.
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