Is binding arbitration the long-term solution to Covid 19 rent arrears? – An update on the position

On 6th August 2021 we published an article titled "Is binding arbitration the long-term solution to Covid 19 rent arrears?". This article provides an update on this and should be read alongside it. As lockdown lifts the UK Government is beginning to offer more detailed insights into how it proposes to manage property disputes that have arisen during and/or because of the pandemic.

The UK Government has confirmed that as of 1 October 2021 winding up petitions can be made. These petitions will have an increased lower limit of £10,000 or more. In addition, a creditor must now seek proposals for payment from a debtor business and give them 21 days to respond before it can issue a petition. Both these measures are aimed at protecting smaller businesses.

Importantly, the lifting of these restrictions does not apply to commercial rent arrears. The restriction on winding up petitions for arrears of rent remains in place for commercial landlords and tenants until at least 31 March 2022. This is intended to allow time for the Government to implement the rent arbitration scheme mentioned in our previous update.

The extension of the protection for commercial tenants reiterates the Government's intention of continuing to provide protection for tenants. The announcement does not however provide a clear indication as to the date for implementation of the rent arbitration scheme, but it will presumably be in the next few months and no later than 31 March 2022.

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