Landlords hoping to finally recoup billions of pounds in outstanding rent following coronavirus lockdowns are being warned they face a raft of hurdles and pitfalls.
Civil litigation solicitor Rachel Chambers said that new legislation going through Parliament will come as a relief to commercial landlords chasing money owed by their business tenants – but they will still be significantly restricted from many traditional routes of recovering rent built up during lockdowns and Covid restrictions.
The Commercial Rent (Coronavirus) Bill is expected to become law in 2022 and will introduce a system where commercial landlords and tenants will go to arbitration if they cannot agree on the payment of relevant outstanding rent.
Ms Chambers, from Shropshire law firm mfg Solicitors, said: “The decision of the government-appointed arbitrator will be legally binding. On the one hand, this allows commercial landlords and tenants an opportunity to finally put to bed arrears accrued during the lockdowns or when certain businesses weren’t allowed to trade as normal where agreement has not already been reached. On the other hand, the process will come with its own pitfalls and hurdles, which landlords and tenants alike need to be ready for, and traditional recovery methods such as Court proceedings or insolvency will continue to be significantly restricted.”
A new measure in the legislation will prevent commercial landlords from making a debt claim while they are still banned from exercising CRAR. There will also be extensions to existing rules preventing commercial landlords from taking what they are owed out of the tenant’s deposit, trying to start winding up proceedings or forfeiting the lease.
She added: “The important thing for any landlord who wants to get back what they are owed, or for any tenant who fears being evicted for arrears built up while they were unable to trade, is to seek legal advice ahead of the introduction of the new rules and the binding arbitration process.”
It is currently expected that the legislation will take effect from March 2022.