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Temporary Moratorium for Commercial Protected Rent Debts

April 2022

Commercial landlords and tenants in England and Wales, who have not reached an agreement on how to address rent arrears (which built up during the pandemic when businesses were forced to close), will now be able to use the new binding arbitration system introduced by the Commercial Rent (Coronavirus) Act 2022 (‘the Act’), which came into force on 24 March 2022.

The previous newsletter, Commercial Rent (Coronavirus) Bill, set out further details of the arbitration procedure and the temporary moratorium being introduced under the Act.

From the 24 March 2022:

1. There is a six-month window for either party to apply for arbitration; and

2. In relation to protected rent debts only, there will be a temporary moratorium on certain remedies until the arbitration is concluded, or until the six-month window referred to above has passed (and no arbitration was sought) (‘the Moratorium Period’).

Under the temporary moratorium landlords will not be able to:

a. Forfeit the lease;

b. Exercise Commercial Rent Arrears Recovery (CRAR);

c. Issue debt claims on the tenant (and if applicable, the guarantor); and/or

d. Draw-down on the tenant’s deposit.

If a debt claim was made for protected rent debts on or after 10 November 2021 (but before 24 March 2022), either party can request that the claim be stayed. If a judgment was made during this period, it will not be enforced during the Moratorium Period.

Temporary restrictions will also apply in relation to certain insolvency arrangements, other arbitration proceedings and issuing winding-up petitions and petitions for bankruptcy orders in respect of protected rent debts.

Commercial landlords and tenants are still being encouraged to reach an agreement before going to arbitration. Tenants who can repay their debts should do so and landlords are being encouraged to share the financial burden.

This newsletter is a high-level summary and covers the key issues. A link to the Act can be found here.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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