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New laws and code of conduct to help protect businesses from eviction

Commercial property tenants will be further protected from eviction after the Government announced new laws and a code of practice to deal with rent arrears.

The Government announced a ban on business evictions at the start of the pandemic, which remains in force until March 2022.

Under the new temporary measures, landlords will not be able to chase business tenants for rents through the courts, in a move aimed at encouraging firms to negotiate the estimated £7 billion of debts accrued during the pandemic.

The new measures include:

  • Laws to provide a legally-binding process to resolve the remaining commercial rent debts
  • A new Code of Practice published to guide landlords and tenants in how to negotiate a way forward
  • Changes that will protect tenants from rent debt claims against them and help the market return to normality

The move was welcomed by the hospitality industry. Kate Nicholls, chief executive of trade body UKHospitality, said: “We share Government’s view that arbitration should be a last resort and this process must take into account the exceptional and existential level of pain that hospitality businesses have faced over the last 18 months.”

The measures, announced by Business Secretary Kwasi Kwarteng, says negotiations on arrears will be underpinned by the new Code of Practice, providing landlords and tenants with a clear process for settling outstanding debts before the new arbitration process comes into force.

The Code says 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 can do so.

The Government says commercial tenants will be protected from debt claims, including County Court Judgements (CCJs), High Court Judgements (HCJs) and bankruptcy petitions issued against them concerning arrears from when they had to close for lockdowns.

From 25 March 2022, new laws introduced in the Commercial Rent (Coronavirus) Bill, introduced in Parliament, will establish 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.

The Bill, expected to come into force next year, will apply to commercial rent debts related to certain businesses such as pubs, gyms and restaurants which were forced to close during the pandemic.

Debts accrued at other times will not be in the scope of the new laws, which will come into force in England and Wales, and Northern Ireland will have a power in the Bill to introduce similar legislation.

For help and advice with commercial property matters, please get in touch with our expert team today.

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