If you’re a landlord of commercial property or a tenant struggling with your business premises lease costs, then you need to know the following important changes: for landlords this may be welcome news due to having tenants in arrears and the need to take possession of their property.
The moratorium on landlord remedies which affected commercial rent arrears recovery (CRAR) and forfeiture of lease ended on March 25, 2022. The Commercial Rent (Coronavirus) Act 2022 (CR(C)A 2022) came into force on the March 24, 2022 and has an effect on both CRAR and forfeiture.
The processes of the above two remedies remains unchanged but CR(C)A 2022 imposes restrictions. It does this by ring-fencing the rent that accrued during a ‘protected period’ and allowing the liability for ‘protected rent’ to be referred to arbitration. The criteria for ‘protected rent’ are:
A business tenancy: where the business and/or premises were forced to fully/partially close under coronavirus regulations. It doesn’t matter if some limited activities were allowed despite requirement to close. The arrears related to the relevant period; beginning at or after 2pm on March 21, 2020 and ending at or before 11:55pm on July 18, 2021 (in England) or 6am on August 7, 2021 (in Wales). If the arrears fall under the above criteria the only option for parties is arbitration. This must be done via a Government-approved arbitration body. Landlords cannot apply the below remedies during the period which begins the day CR(C)A 2022 was passed and ends either after the six months arbitration application period passes or when arbitration has concluded
Debt claims in civil proceedings: using the CRAR power and the protected debt is to be disregarded when calculating the net unpaid rent for CRAR; notice of enforcement in relation to the protected debt; enforcing a right of re-entry/forfeiture; using the deposit. Arbitration is not an option if the tenant is subject to a company voluntary arrangement, an individual voluntary arrangement or a compromise/arrangement which relates to any protected rent debt.
For advice on commercial property talk to our Commercial Property team; for enquiries relating to CRAR, contact our Commercial Litigation team on 0800 088 6004 or visit the Wilson Browne Solicitors website.