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Commercial property rent arrears following pandemic

Jonathan Bouchta is a Partner and Head of Property Litigation at GA Solicitors...

As a property disputes lawyer, a large proportion of my time during the last 18 months has been spent advising both landlords and tenants on rent arrears that have accrued since the start of the pandemic.

Looking back to last March, the Government had to act quickly to help business tenants who could not pay their rent due to lockdown(s).

The Coronavirus Act 2020, amongst other things, restricted a landlord’s ability to forfeit commercial leases due to non-payment of rent (forfeiture allows landlords to terminate the lease by peaceably re-entering the premises and taking possession).

This restriction was extended on various occasions and continues until March 25, 2022 although, as an aside, landlords can still seek to forfeit where there are other breaches of the lease.

There are ongoing issues between many landlords and tenants regarding rent arrears (which can be substantial) that have accrued during the course of the pandemic and the periods of lockdown.

In June 2021, the Government announced that it planned to bring in a binding arbitration process to deal with claims/disputes between landlords and their tenants regarding those arrears.

On August 4, 2021, a policy statement was published which provides some further clues on how this may work. The details will be made known in due course.

It is understood that arrears accrued during COVID-19 restrictions are to be ‘ring-fenced’ and the parties must engage in a mandatory arbitration process if negotiations prove fruitless. 

It is also made clear that tenants should now be paying rent given that all restrictions have been lifted.

If they have not done so already, landlords should seek advice now to determine what action could/should be taken.

Similarly, tenants should seek advice on how to protect their position and ability to trade from the premises.

An experienced property litigator with two decades of experience, I can be contacted on 01752 203500 or by emailing jonathan.bouchta@GAsolicitors.com

Jonathan Bouchta

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