The ban on commercial evictions and commercial rent arrears recovery is extended until 25 March 2022
The Government has today (16 June 2021) announced a further extension to the ban on commercial evictions and commercial rent arrears recovery (CRAR) until 25 March 2022 (two years after it was first introduced). This news follows the Prime Minister’s announcement to impose a four-week pause on the ending of the restrictions.
The Government’s objective is to allow businesses to continue to trade when they are struggling to pay rent, and to help protect jobs.
This is therefore not welcome news for commercial landlords who may have not received rent from tenants for several months and are unable to take action. The Government has announced however a slightly improved situation for landlords than the status quo, a so-called “back-stop”, to help support the resolution of debts. This includes the following steps:
— Landlords and tenants are encouraged to resolve debt issues through negotiation or arbitration (this has been the case since the start of the moratorium last year).
— From today, the Government has stated that tenants should start to pay rent either in accordance with their lease or within a payment plan agreed with their landlord.
— If tenants do not pay and if negotiations are not successful, both parties will now be required to undertake compulsory arbitration.
Another option to recover commercial rent arrears is to issue a claim in the County Court for the arrears, and to then transfer the judgment to the High Court for enforcement under a Writ of Control (which is now enforceable).
These new measures are intended as a way to strike “the right balance between protecting landlords and supporting those businesses that are most in need.” It is estimated that the retail and hospitality sectors alone have built up £5bn in rent arrears.
Whilst this may be a welcome relief in form for many tenants struggling to pay their rents, especially those who have not yet recovered from enforced closures, it doesn’t actually make the problem go away, but rather delays the inevitable. The new measures mean that the rent arrears do need to be addressed and dealt with in a reasonable way, otherwise the parties will be forced to arbitrate on the issue.
Our highly experienced Property Disputes team can help advise you in terms of steps forward with regard to commercial rent arrears, including handling any new arbitrations arising from rent disputes that cannot be settled. We can help both commercial landlords and tenants. Please get in touch.
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