LEGAL COLUMN: Collaboration between landlords and tenants is needed when restrictions cease

The Coronavirus Act 2020 was introduced at the height of the pandemic to provide a host of protective measures, including to tenants who were not able to pay rent, writes Jagdeep Sandher, head of dispute resolutions at Blythe Liggins in Leamington.

Jagdeep Sandher says tenants and landlords need to talk to each other

The provisions in the act meant that landlords were unable to forfeit or obtain possession of commercial leases for unpaid rent; were restricted in forcing tenants into any form of insolvency; and were restricted in enforcing the terms of leases by way of commercial rent arrears recovery.

These rules are set to end next month, but there are several issues that will remain once those restrictions cease, all of which stem from the pandemic, which has created a knock-on effect with so many tenants and landlords around the country, regardless of how big or small they are.

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So many businesses were affected by the forced closures which seriously impacted tenants’ ability to pay rents.

As we slowly emerge from the Covid-19 pandemic and the economy returns to a semblance of normality, it is important that tenants and landlords understand and work together to reach amicable and workable solutions.

In June last year, the government announced a plan for intended ring fencing of rent arrears that were accrued during the pandemic and for a scheme of mandatory arbitration, essentially as a way of ensuring that the pain of the pandemic is shared between landlords and tenants alike.

It is therefore anticipated that the Commercial Rent (Coronavirus) Bill will become law by March 25, when the other restrictions come to an end.

It must be noted that any arrears that do not fall within the ring-fenced scheme can be enforced in the normal way.

The mandatory arbitration will also be binding on both the tenant and the landlord, so both should act reasonably during the discussions as the outcome of any arbitration may not be as favourable as a negotiated settlement.

The Commercial Rent (Coronavirus) Bill has been massively beneficial in helping keep tenants afloat, but landlords and tenants now need to work together to ensure amicable partnerships continue and properties around the country aren’t left empty.