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New laws and code to resolve remaining COVID-19 commercial rent debts

Business Secretary Kwasi Kwarteng has announced that new laws and a Code of Practice are being introduced to resolve the remaining commercial rent debts accrued as a result of the pandemic.

Commercial tenants will remain protected from eviction until 25th March 2022, allowing time for landlords and tenants to negotiate how to share the cost of commercial rent debts. From today, these new negotiations will be underpinned by a new Code of Practice, providing both landlords and tenants will a clear process for settling these outstanding debts before the introduction of the arbitration process.

The Code sets out that 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. Then, from 25th March 2022, new laws will be introduced in the Commercial Rent (Coronavirus) Bill, establishing 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.

Kwasi Kwarteng said that “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 also added that “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.”

Alongside this, the Department for Levelling Up, Housing and Communities will publish an updated Code of Practice for commercial landlords and tenants imminently.


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