Contact Us
Sign In
Join us

David jones of Womble Bond Dickinson discusses the newly passed law and its implications on you. 

A new law has been passed in March 2022 (the Act) dealing with some of the unresolved rent arrears for commercial premises which accrued during the pandemic, and setting out a new arbitration scheme for “Protected Rent”.  

This law has been on the cards for some time having been working its way through parliament since November 2021 following its initial announcement that August.  

Since the law was passed on 24 March 2022 a period of 6 months began for retailers to refer disputes to the arbitration scheme, though there is scope for ministers to extend this. This means that you would need to have notified the landlord of your intention by 26 August 2022 to ensure you can use the scheme.

Retailers need to be careful. The Scheme does protect some Rent Debts, but the Landlord can act on any other debts.


What benefits can BRC Members potentially achieve using the bill? 

To the extent that your Rent is caught by the Act the arbitrator could decide to: 

  • Write off all or part of the Arrears.
  • Allow up to 2 years to make payment.
  • Write-off any interest.

These powers are referred to as relief from payment.

What do BRC members need to be aware of?  

The Act covers only Protected Rent for a specific period as defined. This differs with regards to when they were allowed to re-open without restrictions. For those dubbed at the time as non-essential retail, it covers only Rent apportioned to the period 21 March 2020 – 12 April 2021. If you have arrears attributable to any other period, it will be important to liaise with your landlord to discuss your options to repay these. There is a code of practice that covers these arrears, but this is voluntary. The landlord’s rights to forfeit the lease, take control of your goods or issuing winding up periods once again became available on 25 March 2022.


What can BRC members expect if they are seeking to rely on the new law?  

Either a tenant or a landlord can make a reference to the scheme. They need to notify the other party and can then proceed to make the reference after 14 days if there is a reply or 28 if there isn’t any reply from the other party.  

The arbitrator will then decide whether they can accept the referral. To be eligible for the scheme, you need not only to have a Protected Rent Debt, but your business must also be viable, excluding the impact of the Protected Rent Debt.  

What is considered to be viable can vary depending on the industry you trade in. However, as a rule of thumb if, setting aside the Protected Rent Debt, your business can meet its obligations and continue trading I would expect this to be sufficient.  

When making a reference to the scheme, that party must prepare a proposal for the repayment, the other party can prepare their own proposal within 14 days and each party then may submit further revised proposals within 28 days.  

The arbitrator will then consider the proposals after any deadline for final proposals has passed. this can be done on paper or at an oral hearing  

The arbitrator will make their decision based on the following principles: 

  • If you can pay your arrears, the arbitrator will state that you should pay them without delay.  
  • If your business is not viable because of the arrears, but would be setting these aside, then the arbitrator will award relief from payment. However, this will be no more than they believe is necessary to preserve your business.  
  • If the landlord can show that their solvency is in jeopardy as a result of the arrears, the arbitrator will not award any relief. 

The arbitrator will review the proposals. If any of the proposals meet the above principles they will uphold that proposal. If there are no proposals that meet the principles, the arbitrator can use their own judgment to decide what to award.  

They will communicate their decision within 14 days after an oral hearing, or as soon as possible otherwise. 

Rent includes not just rent but also service charges, insurance rent and most other payments due under a Lease.


What should BRC members be doing now if they plan on referring to arbitration?  

You should consider notifying the landlord of an intention to refer to arbitration. This then allows you the maximum period to make the reference and prepare your proposal and evidence.  

You should also begin preparing documents that you will use to show the impact of the pandemic on your business’ performance. Your accountant will be able to assist in preparing these documents.  

Arbitration is a very intense procedure, so the better prepared your information is the better the chance of a positive result. Given how busy we expect the arbitrators to be dealing with arrears, clearly presenting the difficulties you have faced in the most accessible format for the arbitrator might well be the difference between success and failure.  

I’d be happy to chat through exactly how the new law impacts on your business and how you can deal with any arrears that might have accrued. 

To find out more about Womble Bond Dickinson and the services they provide to the retail industry, click here.

This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.