Press release NEW LAWS AND CODE TO RESOLVE REMAINING COVID-19 COMMERCIAL RENT DEBTS New laws and a Code of Practice are being introduced to resolve the remaining commercial rent debts

accrued because of the pandemic. This was published under the 2019 to 2022 Johnson Conservative government * New laws to be introduced to provide a legally-binding process to resolve the

remaining commercial rent debts * a new Code of Practice published to guide landlords and tenants in how to negotiate a way forward * changes will protect tenants from rent debt claims

against them and help market return to normality New laws and a Code of Practice are being introduced to resolve the remaining commercial rent debts accrued because of the pandemic, Business

share the cost of commercial rent debts caused by the pandemic. From today, these negotiations will be underpinned by a new Code of Practice, providing landlords and tenants with a clear

process for settling outstanding debts before the new arbitration process comes into force. The Code sets out that, in the first instance, tenants unable to pay in full should negotiate with

their landlord in the expectation that the landlord waives some or all rent arrears where they are able to do so. From 25 March 2022, new laws introduced in the Commercial Rent

(Coronavirus) Bill, being introduced in Parliament today, will establish a legally-binding arbitration process for commercial landlords and tenants who have not already reached an agreement,

following the principles in the Code of Practice. Subject to Parliamentary passage, this will come into force next year. The Bill will apply to commercial rent debts related to the mandated

closure of certain businesses such as pubs, gyms and restaurants during the pandemic. Debts accrued at other times will not be in scope. These laws will come into force in England and

Wales, and Northern Ireland will have a power in the Bill to introduce similar legislation. The result of the arbitration process will be a legally-binding agreement the landlord and tenant

must adhere to, resolving rent arrears disputes and helping the market return to normal as quickly as possible. From tomorrow (10 November 2021), the government is also protecting commercial

tenants from debt claims, including County Court Judgements (CCJs), High Court Judgements (HCJs) and bankruptcy petitions, issued against them in relation to rent arrears accrued during the

pandemic. This measure will provide further protection to businesses which had to close and accumulated debts during the pandemic, while protections from forfeiture for business tenancies

are in place under the Coronavirus Act 2020. Business Secretary Kwasi Kwarteng 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. UK Hospitality CEO Kate Nicholls OBE said: > We welcome the publication of the updated Code of Practice. Vitally

> important is the emphasis on ongoing negotiation to share the burden > of the impact of lockdowns and restrictions that prevented > hospitality businesses from trading for so much

 of the last 18 > months. It is in the long-term interests of landlords and tenants to > come together and find solutions that ensure business survival and > that do not undermine 

the economic recovery. >  > We share government’s view that arbitration should be a last > resort and this process must take into account the exceptional and > existential level 

of pain that hospitality businesses have faced > over the last 18 months. It must not impact this industry’s > ability to rapidly recover and create jobs throughout the country. 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. British Property Federation CEO Melanie Leech said: > Property owners 

and their tenants should be wholly focused on > working together to continue the economic recovery from the Covid-19 > pandemic. The majority have already reached agreement on the >

 treatment of Covid-related rent arrears, with millions of pounds of > support being provided by property owners to tenants in distress. >  > The publication of an updated Code of 

Practice is a clear signal and > framework for the minority who have not yet done so, to come > together, reach agreement and look to the future. Andrew Goodacre, Chief Executive of

British Independent Retailers Association commented: > We welcome this new code of practice. It encourages both landlords > and tenants to negotiate and share the burden caused by this

> pandemic. Independent retailers have worked so hard to reach this > point after the hardest 18 months we can all remember, and it would > be a tragedy if the ongoing survival of 

the business was jeopardized > due to rental debt. Survey data from the British Property Federation indicates that agreement has been reached on the treatment of rent arrears in the vast

majority of cases – more than 80% – since the start of the pandemic. Today’s announcement follows the Autumn Budget which included further measures to support commercial landlords and

tenants. This includes reducing the burden of business rates in England by freezing the business rates multiplier for a further year – a tax cut worth £4.6 billion over 5 years – and

introducing a 50% business rates discount for the retail, hospitality, and leisure sectors in England. ADDITIONAL INFORMATION * the Code of Practice applies across the UK. The legislation

will apply to England and Wales, with a delegated power for Northern Ireland. Scotland has adopted an alternative approach to commercial evictions since the start of the pandemic, due to

different property legislation and market conditions * the intention is for the new legal arbitration process to come into force from 25 March 2022, subject to Parliamentary passage of the

Commercial Rent (Coronavirus) Bill that has been introduced today * the laws will apply to businesses which were mandated to close, in full or in part, from March 2020 until the date

restrictions ended for their sector. Debts accrued at other times will not be in scope * for those tenancies that fall within scope of the Bill and have failed to reach agreement, either

party can apply for arbitration unilaterally, as a backstop after negotiations have failed. Parties are free to continue to negotiate outside of the legal arbitration process once it comes

into force. The Code signposts tenants and landlords to forms of alternative dispute resolution, such as mediation, if they wish to pursue this * the government encourages landlords and

tenants to negotiate their own agreement where possible instead of resorting to the arbitration process * the window to apply for arbitration will be 6 months from the date legislation comes

into force, with a maximum time frame to repay of 24 months * the new Code of Practice replaces the Code of Practice for commercial property relationships originally published on 19 June

2020 and updated in April 2021 * the legal arbitration process will be delivered by private arbitrators in accordance with guidelines set out in the legislation, and they will have to go

through an approval process to demonstrate their impartiality and competency to supply dispute resolution services. BEIS will publish a list of approved bodies in due course, and landlords

and tenants within scope will be able to apply directly to any approved arbitration body for their dispute resolution if negotiations have failed * landlords are encouraged to attempt to

reach a negotiated agreement with tenants rather than pursue a CCJ. Where a CCJ is issued, this can be considered within the legal arbitration process when this comes into effect. See also:

New measures in Bill to assist commercial landlords and tenants in resolving rent debts resulting from the COVID-19 pandemic SHARE THIS PAGE The following links open in a new tab * Share on

Facebook (opens in new tab) * Share on Twitter (opens in new tab) UPDATES TO THIS PAGE Published 9 November 2021