Protection for Commercial Tenants under Review

The Government is containing with it’s plans to extend protection for commercial tenants and has indicated that it will introduce a new ring-fencing and arbitration scheme. The new legislation to deal with the commercial rent arrears which have built up as a result of the Covid-19 pandemic.

The legislation is expected to be introduced before the end of the moratorium on forfeiture proceedings for non-payment of rent (25 March 2022).

The government has put forward the following proposals:-

• To ringfence commercial rent arrears that built up since March 2020 (due to business closures), until restrictions for their sector were lifted. Once the arrears are ringfenced, landlords will not be able to forfeit the lease for non-payment of these arrears or take insolvency proceedings against the tenant for this debt.

• To encourage landlords and tenants to negotiate in good faith and reach a solution where possible, using the principles set out in the revised Code of Practice (referred to below).

• Landlords are expected to “share the financial burden with tenants” and “defer or waive entirely an appropriate proportion” of those ringfenced arrears.