Commercial tenants handed extra protections

Commercial tenants forced to close due to the pandemic have been handed protections from court action, while an arbitration process has been introduce to resolve disputes between tenants and landlords.

They are now protected against against County Court Judgements, High Court Judgements and bankruptcy petitions.

The government has put in a new Code of Practice, saying that tenants unable to pay in full should negotiate with their landlord with the expectation that the landlord waives some or all rent arrears.

For those who don’t reach an agreement the Commercial Rent (Coronavirus) Bill will establish a legally-binding arbitration process for commercial landlords and tenants from 25 March 2022.

The legal arbitration process will be delivered by private arbitrators.

The government will publish a list of approved bodies, with landlords and tenants being able to apply directly to any approved arbitration body for their dispute resolution if negotiations have failed.

Kwasi Kwarteng, business secretary, 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.”

The rules apply in England and Wales, while the government of Northern Ireland will have the power to introduce similar legislation.

Existing measures mean commercial tenants can’t be evicted until 25 March 2022, as the government looks to keep businesses trading.

The rules appear to be focused on businesses like pubs, gyms and restaurants, who were particularly badly hit by the closures caused by the pandemic.

Helen Dickinson OBE, chief executive of the British Retail Consortium, said: “The overwhelming majority of retailers with stores just want the breathing space to trade their way out of the debt unavoidably built up during the pandemic and a constructive agreement with their landlord.

“While we support the principle of compulsory arbitration, the devil will be in the detail on issues around what tenant viability really means in practice and the power of arbitrators. We will engage closely and constructively with government to help ensure their proposals protect otherwise viable businesses, secure the recovery, and protect jobs.”

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