Ringfencing, Restrictions and Recovery – forfeiture moratorium extended until 25 March 2022
On Wednesday 16 June, the UK government extended the current forfeiture moratorium for commercial tenants until 25 March 2022. This provision was initially due to expire on 30 June 2020 but has since been extended four times. This announcement will come as unwelcomed news to many commercial landlords who are keen to have their ability to reinforce reinstated.
Extension of the current measures
- the moratorium on a commercial landlord’s right to forfeit a business tenancy for non-payment of rent will be extended until 25 March 2022;
- a landlord will continue only to be able to use the Commercial Rent Arrears Recovery (CRAR) procedure to recover rent which has been outstanding for at least 554 days; and
- the restrictions which prevent a landlord from serving a statutory demand and limit its ability to present a winding-up petition will be extended until 30 September 2021.
New legislation – ringfencing and mandatory arbitration
As well as announcing the extension of the current measures, the government also announced new legislation would be introduced to ringfence outstanding unpaid rent that has accrued where businesses have been forced to remain closed. Landlords are asked to make allowances for these ringfenced arrears, such as waiving some of the amount due or agreeing a repayment plan with the tenant.
The onus will be on landlords and tenants to agree the outstanding sums but where an agreement cannot be reached, private arbitrators will be called to deliver a binding arbitration process. At this stage, there is little detail on how the arbitration process will work and who will bear the costs. Will this encourage landlords and tenants to reach agreements in relation to outstanding sums or will it instead allow for a new wave of disputes?
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