New laws resolve commercial rent debts from pandemic

Changes to help protect commercial tenants from rent debt claims against them and help the market return to normality have been announced.

New laws are expected to be introduced to provide a legally-binding process to resolve the remaining commercial rent debts, alongside a new Code of Practice to guide landlords and tenants in how to negotiate a way forward.

Commercial tenants are protected from eviction until 25 March under government action from last year to protect jobs and give firms breathing room where they had to shut during the pandemic, while providing time for landlords and tenants to negotiate how to share the cost of commercial rent debts.

From today, these negotiations will be underpinned by a new Code of Practice, providing landlords and tenants with a clear process for settling outstanding debts before the new arbitration process comes into force.

Business secretary Kwasi Kwarteng said: ‘Today’s measures provide commercial landlords and tenants with the clarity and certainty they need to plan ahead and recover from the pandemic.

‘We encourage landlords and tenants to keep working together to reach their own agreements ahead of the new laws coming into place, and we expect tenants capable of paying rent to do so.’

UK Hospitality CEO Kate Nicholls OBE added: ‘We welcome the publication of the updated Code of Practice. Vitally important is the emphasis on ongoing negotiation to share the burden of the impact of lockdowns and restrictions that prevented hospitality businesses from trading for so much of the last 18 months. It is in the long-term interests of landlords and tenants to come together and find solutions that ensure business survival and that do not undermine the economic recovery.

‘We share government’s view that arbitration should be a last resort and this process must take into account the exceptional and existential level of pain that hospitality businesses have faced over the last 18 months. It must not impact this industry’s ability to rapidly recover and create jobs throughout the country.’

Survey data from the British Property Federation indicates that agreement has been reached on the treatment of rent arrears in the vast majority of cases – more than 80% – since the start of the pandemic.

In related news, the government is supporting 477 locally led projects that aim to help regenerate towns, villages and coastal communities and deliver net zero through the £200m Community Renewal Fund.

Photo by Mike Petrucci