The Commercial Rent (Coronavirus) Act 2022 (c. 12) is an act of the Parliament of the United Kingdom aimed to help commercial landlords and tenants in resolving rent arrears that arose as a result of the COVID-19 pandemic.
During the COVID-19 pandemic, many businesses were mandated to close in full or in part by government. At the same time, the government introduced an eviction moratorium and protection for thousands of commercial tenants. As a result, many businesses accrued debts: 33% of SMEs held debt levels of more than 10 times their cash balances, versus 14 per cent before Covid-19 hit.
As the restrictions ended on 18 July 2021, and in an effort to protect a large number of businesses from eviction and reduce the number of jobs at risk of insolvency, regulatory intervention was proposed for England and Wales. This was announced by Government on 16 June 2021 the intention is to ringfence unpaid rent that had built up when a business has had to remain closed during the pandemic. Landlords were expected to make allowances for the ringfenced rent arrears and share the financial impact with their tenants. The rent from the closure periods is now defined as protected rent debt in the bill.
The act introduced a mandatory code of practice for commercial landlords and tenants to follow. The Act gives protection for those operating under a businesses tenancy from rent debt recovery, and if no agreement can be reached, that the matter can then be resolved by arbitration.
The arbitration award can alter the principle sum owed under a business tenancy and give business tenants time to pay (up to 24 months). The act also amended the Arbitration Act 1996 under Schedule 1.
The act also outlined the period of time (6 months) in which either a landlord or tenant could make a referral to arbitration.
The bill was introduced on 9 November 2021. The bill became law on 24 March 2022.