The Commercial Rent (Coronavirus) Act 2022
The Commercial Rent (Coronavirus) Act 2022 (“the Act”) came into force on 24th March of this year. The purpose of this Act is to help tenants under commercial leases make arrangements with their landlords regarding payment of any rent arrears that fell due during the COVID-19 pandemic. It does this by setting out the framework of an arbitration process for the parties concerned. This Act also protects tenants from their Lease being forfeited if outstanding rent payments first became payable during the pandemic.
This Act will apply to your business tenancy if you are in arrears for rent that fell due during the protected period and if your business was adversely affected by coronavirus. Read on to find out more.
Below, we set out the most important provisions of the Act:
Please note that these provisions apply to English business tenancies only – for Welsh business tenancies, please see the relevant provisions of the Act.
Section 3: “Protected Rent”
This refers to the rent attributable to the protected period (see below). Rent due under the tenancy will be “protected” under the Act if your business was adversely affected by coronavirus and if the rent fell due during the protected period.
Section 4: “Adversely Affected by Coronavirus”
This means your business was required by coronavirus-related regulations to close its premises in whole or in part between 21st March 2020 and 18th July 2021.
Section 5: “Protected Period”
This period commenced on 21st March 2020 and ended either on 18th July 2021 or before this depending on the last day your business was subject to either a coronavirus-related closure requirement or specific coronavirus restrictions.
Section 23: “Moratorium Period”
This period began on 24th March 2022 and ends either six months after this date or, if you have commenced arbitration proceedings, whenever the arbitration is concluded.
- Schedule 2, paragraph 2: a Landlord may not, during the moratorium period for the protected debt, make a debt claim in a civil court to enforce payment of the protected debt.
- Schedule 2, paragraph 5: a Landlord may not, during the moratorium period for the protected debt, re-enter the Premises or forfeit the Lease for non-payment of the debt.
- In most cases, the Lease will contain a forfeiture clause that permits the Landlord to re-enter the Premises and forfeit the Lease (bring it to an end) if rent is not paid within a specified deadline. This Act overrides such provisions in a Lease where applicable.
- Schedule 2, paragraphs 7 and 8: subject to when payment was made, where a tenant has made payment of rent at a time when the tenant owed the landlord an unprotected rent debt in addition to protected rent debts, the landlord must use this payment to satisfy unprotected rent debts first.
How can the Commercial Rent (Coronavirus) Act 2022 benefit me?
The Act can benefit tenants under commercial leases primarily in two ways:
If you have not been able to come to an agreement with your landlord regarding payment of rent arrears.
This Act provides for relief from payment of protected rent debts due from a tenant to a landlord to be resolved by arbitration. By proceeding with arbitration, a tenant and a landlord may come to an agreement over how and when payment of arrears is to be made. Through arbitration, a tenant may also be able to secure a partial reduction of the outstanding rent arrears.
If your Landlord has re-entered the Premises and forfeited the Lease for outstanding rent payments.
If the outstanding rent payments fall within the protected period and you satisfy the requirements of the Act, then you may be able to retrieve possession of the Premises without having to pay the outstanding rent. If the Landlord had unlawfully forfeited the Lease in contravention of the Act, you may also be able to make a claim in damages against the Landlord.
At TV Edwards, our Dispute Resolution solicitors are experts in all aspects of civil procedure and litigation. We have successfully acted for tenants under this Act and can provide you with advice with your matter. If you would like to find out more about the services we can offer you, please contact the Dispute Resolution team at TV Edwards Solicitors LLP.