commercial rent arrears recovery

Commercial rent arrears recovery: Reliefs continue until March 2022

At the time of writing, we are 18 months on from the World Health Organisation’s announcement of the global Pandemic. On 14 June 2021, the Government announced that it would be pushing back the lifting of all restrictions. This has brought about a flurry of related new legislation, extensions, reliefs and further pushbacks by the Government. Whilst many fixate on the prospect of the ‘freedom day’ proposed for 11 July, for commercial landlords and tenants there have been other major developments. The Government has announced an extension of the commercial eviction ban until 25 March 2022.

Eviction ban for commercial rent arrears

Earlier in the pandemic, the Government announced protections for commercial tenants in respect of any unpaid rent. Essentially, the Government banned landlords from evicting commercial tenants on grounds of rent arrears. This was originally due to end on 31 December 2020. This recent announcement will be the third time it has been extended. It is now due to end on 25 March 2022. However, one striking difference with this update is the introduction of a backstop. Now, if commercial negotiations between tenants and landlords are not successful, the parties must enter into compulsory binding arbitration.

Of course, many businesses remain shut, or heavily restricted, which adversely affects their income. It is therefore suspected that the recent decision to push back the date is a direct result of the announcement to delay lifting all restrictions. We understand that the Government does not intend to extend the ban again.

Commercial Rent Arrears Recovery (CRAR)

When lockdown first hit, the Government restricted landlords using Commercial Rent Arrears Recovery (CRAR) to recover unpaid rent. The Ministry of Justice confirmed in their recent announcement that they are also extending the restriction on the use of the CRAR process by landlords. The total number of days’ outstanding rent required for CRAR will remain at 554 days.

It is hoped that this measure will continue to provide protection to tenants of commercial leases who have accumulated rent arrears during the coronavirus period.

Despite the restrictions on the use of CRAR, the Government has restated the importance that commercial tenants pay rent. This would be ideally in accordance with their lease, or as otherwise agreed with their landlord.

We have seen legislation regarding commercial rent arrears changing quarterly since March 2020 and it can be difficult to keep up. As a result, it is important to seek specialist legal advice before taking any action (whether as a landlord or a tenant). Call our commercial property disputes team on 0800 988 7756 for a free initial discussion.