Landlords able to enforce payment of ring-fenced rent arrears from 24 September 2022

The moratorium on enforcement proceedings introduced by the Commercial Rent (Coronavirus) Act 2022 (“the Act”) for arrears of rent relating to commercial premises which had to close due to Covid is due to expire on 23 September 2022 for those tenants who have not yet sought relief by way of arbitration under the Act. It is a requirement under the Act that a reference to arbitration must be preceded by a notice of intention served by either party a minimum of 28 days prior to the reference to arbitration. Accordingly, any party who has not yet served a notice of intention is now out of time to make any reference by the 23 September 2022 deadline.

At present, there is no indication the Government will extend this moratorium. However, for the relatively few parties who have already made the necessary reference to arbitration under the Act (or manage to do so before Friday), their proceedings and the moratorium will continue until the arbitrator’s award is handed down.

The relatively low numbers of tenants who made use of the Act may come as a surprise, given the considerable coverage it received in the property press. It is possible that many commercial tenants have not sought relief under the Act because of the expense, a lack of knowledge as to their rights, or because they were aware that their business was likely to be found viable in the long term (meaning they would not fare well in obtaining any financial relief by way of arbitration). Many landlords did, of course, grant concessions to ensure the survival of their tenants who were most affected, making arbitration unnecessary.

Clearly, it is still a question for every landlord as to whether to enforce full payment of what can be very substantial rent arrears (given this may negatively affect the ability of the tenant to continue in business) but the emphasis is now very much on tenants to pay all sums due or, at least, agree to reasonable instalment payments to clear the arrears. Otherwise, they risk forfeiture (if such right has not been waived) or other enforcement remedies such as CRAR.