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On 9 November 2021, the Government introduced the Commercial Rent (Coronavirus) Bill 2021-22 in the House of Commons. Second Reading is expected on 24 November 2021. The Bill, Explanatory Notes, Impact Assessment and Delegated Powers Memorandum can be found on the Bill page.

The issue

Many non-essential businesses were forced to close as part of measures to control the spread of coronavirus. Losing their source of income meant that many fell behind on their rent.

The Treasury estimates that the total amount of business rent arrears could be around £9 billion by March 2022. Data suggests that pubs and bars, restaurants, clothes retailers and hotels owe the most.

Government action

To allow viable business to survive during the pandemic, the Government brought in three main measures to help businesses falling behind on their rent. These were restrictions on (1) landlords forfeiting business leases; (2) using the statutory Commercial Rent Arrears Recovery procedure; and (3) presenting winding-up petitions. These measures are all due to expire at or near the end of March 2022.

In June 2020 the Government, in consultation with industry bodies, introduced a voluntary UK-wide Code of Practice to help commercial landlords and tenants come together to negotiate on rent arrears. A Call for Evidence was then published in April 2021 seeking views on six options for resolving rent debts built up during the pandemic, including allowing some or all its temporary measures to expire, and introducing binding or non-binding arbitration processes.

In response to the Call for Evidence, on 16 June the Government announced that it would extend its temporary restrictions until March 2022 and introduce legislation to establish a binding arbitration system to resolve disputes, where landlords and tenants could not agree on a solution.

The Bill

On 9 November 2021 the Commercial Rent (Coronavirus) Bill was introduced to the House of Commons. It was published alongside an updated Code of Practice which explains the Bill’s processes and sets out the principles that should guide the landlord and tenant in negotiating rent debts. In it the Government indicates that it hopes to pass the Bill by 25 March 2022, to allow the arbitration process to begin afterwards. The Bill consists of thirty clauses and three Schedules divided into four parts:

  • Part 1 gives an overview of the Bill and defines the key terms used in it. It extends to England and Wales only, except for parts of it that interact with Part 3 and so extend to Scotland and Northern Ireland;
  • Part 2 (and Schedule 1) introduces and sets the boundaries of a new binding arbitration process to be used when business landlords and tenants can’t agree how to deal with outstanding rent arrears. It extends to England and Wales only;
  • Part 3 (and Schedules 2 and 3) expand existing restrictions on enforcing business rent arrears, to ensure they cannot be used to undermine the arbitration process. It extends to England and Wales, with certain provisions also extending to Scotland and Northern Ireland; and
  • Part 4 deals with the scope and extent of the Bill. It extends to the whole of the UK, except for clause 28 (granting the Northern Ireland Executive power to introduce a similar arbitration scheme) which is only relevant to Northern Ireland.

Our briefing Coronavirus: Support for businesses discusses different Government schemes available to help businesses during the pandemic.

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