The government is looking to ringfence rent debts accrued during the pandemic by businesses affected by closures. The government will also be setting out a process of binding arbitration to be undertaken between landlords and tenants.
This will only be used as a last resort, after negotiations have been made. Additionally, this may only take place when landlords and tenants cannot come to a final resolution. Before this, the government will publish the principles which they seek to legislate in a revised Code of Practice. The government believes this will allow time for tenants and landlords to negotiate further.
The Code of Practice
The Code sets out a framework for tenants and landlords to work through requests and enquiries on rental payments.
Tenants and landlords both provided feedback in the call for evidence launched in April. The government believes that this Code has been successful in helping to resolve disputes between landlords and tenants. However, landlords and tenants are not currently using the code this way.
Section 82 (England and Wales) Coronavirus Act 2020 will continue until 25 March 2022. During this time, commercial landlords cannot evict their tenants for the non-payment of rent.
The Government stays firm that those tenants who have not been affected by closures and who can pay should pay. Additionally, they expect tenants to begin paying rent again once restrictions are lifted for their sector.
Once legislation passes, the current measures will only apply to ringfenced arrears such as where commercial tenants’ rent debt accrued from March 2020 as well as for those affected by COVID-19 business closures until restrictions for their sector are removed.
In this way, landlords will be able to evict tenants for the non-payment of rent prior to March 2020. They will also be able to evict after the restrictions end for their sector and evict those who have not been affected by business closures.
For the full policy statement, see: Supporting businesses with commercial rent debts: policy statement – GOV.UK (www.gov.uk)