New Laws & Code of Practice on Covid Rent Arrears

The Government has announced (9 November 2021) that it will introduce new laws, and has published a new Code of Practice, aimed at resolving disputes over remaining commercial rent arrears which have accrued since March 2020 during the Covid-19 pandemic. 

The Commercial Rent (Coronavirus) Bill is intended to establish a legally-binding arbitration process for commercial landlords and tenants following the principles contained in the Government’s new Code of Practice.

The Code sets out that, in the first instance, tenants unable to pay in full should negotiate with their landlord in the expectation that their landlord waives some or all rent arrears where they are able to do so.

From 10 November 2021, commercial tenants will also be protected from CCJ’s, HCJ’s and bankruptcy petitions issued against them in respect of Covid-19 rent arrears.

Whilst the Government’s announcement states that the Bill will apply to commercial rent debts related to the mandated closure of certain businesses such as pubs, gyms and restaurants, the new Code of Practice specifically states that it applies to all commercial leases held by businesses which have built up arrears of rent, insurance & service charges as a result of the Covid-19 pandemic whether, for example, in the hospitality, retail (including supply chains), leisure, manufacturing, industrial & logistics, ports, food & drink, or rural sectors.

The Code acknowledges the differing legal framework for agricultural tenancies, but suggests the agricultural sector may wish to consider the principles set out in the new Code of Practice.

The Business Secretary, Kwasi Kwarteng, encourages landlords and tenants to keep working together to reach their own agreements ahead of the new laws coming into place, and expects tenants capable of paying rent to do so.