OpenLegislation

Commercial Rent (Coronavirus) Act 2022 in Scotland

2022 c. 12 · Enacted 24 March 2022 · Extends to United Kingdom

Up to date with all changes known to legislation.gov.uk, revised to 1 April 2022.

An Act to make provision enabling relief from payment of certain rent debts under business tenancies adversely affected by coronavirus to be available through arbitration; and for connected purposes.

[24th March 2022]

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

Contents

  1. Part 1: Introductory provisions
  2. 1Overview
  3. 2“Rent” and “business tenancy”
  4. 3“Protected rent debt”
  5. 4“Adversely affected by coronavirus”
  6. 5“Protected period”
  7. 6“The matter of relief from payment”
  8. Part 2: Arbitration
  9. Approved arbitration bodies
  10. Part 3: Moratorium on certain remedies and insolvency arrangements
  11. 25Temporary restriction on initiating certain insolvency arrangements
  12. 27Temporary restriction on winding-up petitions and petitions for bankruptcy orders
  13. Part 4: Final provisions
  14. 28Power to apply Act in relation to future periods of coronavirus control
  15. 29Concurrent power for Welsh Ministers to apply moratorium provisions again
  16. 30Crown application
  17. 31Extent, commencement and short title
  18. Schedule 3: Winding-up and bankruptcy petitions
  19. 1Prohibition on presenting a winding-up petition solely in relation to a protected rent debt

1OverviewI1

(1)

This Act enables the matter of relief from payment of protected rent debts due from the tenant to the landlord under a business tenancy to be resolved by arbitration (if not resolved by agreement).

(2)

In this Act—

(a)

sections 2 to 6 define for the purposes of this Act the terms “protected rent debt”, “the matter of relief from payment” and other key terms used in this Act;

(b)

Part 2 provides for statutory arbitration between the landlord and the tenant under a business tenancy in relation to the matter of relief from payment of a protected rent debt;

(c)

Part 3 provides for temporary restrictions on the availability of certain remedies and insolvency arrangements that would otherwise be available in relation to a protected rent debt.

(3)

Nothing in this Act is to be taken as—

(a)

affecting the capacity of the parties to a business tenancy to resolve by agreement, at any time, the matter of relief from payment of a protected rent debt (or any other matter relating to the tenancy), or

(b)

preventing an agreement resolving the matter of relief from payment of a protected rent debt from having effect or being enforced.

2“Rent” and “business tenancy”I1

(1)

“Rent”, in relation to a business tenancy, means an amount consisting of one or more of the following—

(a)

an amount payable by the tenant to the landlord under the tenancy for possession and use of the premises comprised in the tenancy (whether described as rent or otherwise);

(b)

an amount payable by the tenant to the landlord under the tenancy as a service charge;

(c)

interest on an unpaid amount within paragraph (a) or (b).

(2)

In subsection (1)—

(a)

a reference to an amount includes any VAT chargeable on that amount;

(b)

a reference to the landlord includes a person acting for the landlord (such as a managing agent);

(c)

“service charge” means an amount—

(i)

which is payable (directly or indirectly) for services, repairs, maintenance, improvements, insurance costs or the landlord’s management costs (including management costs of a superior landlord which the landlord is required to pay), and

(ii)

which is a fixed amount or an amount that varies or may vary according to the relevant costs (or a combination of the two).

(3)

In subsection (2)(c)—

(a)

“insurance costs” includes costs incurred by the landlord in connection with insuring against loss of rent or in complying with obligations under the tenancy either to insure the whole or any part of—

(i)

the premises comprised in the tenancy, and

(ii)

any common parts of a property which includes those premises,

or to pay the costs of such insurance incurred by any superior landlord;

(b)

“the relevant costs” means the costs or estimated costs incurred or to be incurred by or on behalf of the landlord in connection with the matter for which the service charge is payable, and for this purpose—

(i)

“costs” includes overheads, and

(ii)

costs are relevant costs in relation to a service charge whether they are incurred, or to be incurred, in the period for which the service charge is payable or in an earlier or later period.

(4)

An amount drawn down by the landlord from a tenancy deposit to meet the whole or part of a rent debt is to be treated as unpaid rent due from the tenant to the landlord (and such rent is “paid” where the tenant makes good any shortfall in the deposit).

(5)

“Business tenancy” means a tenancy to which Part 2 of the Landlord and Tenant Act 1954 applies.

(6)

“English business tenancy” means a business tenancy comprising premises in England.

(7)

“Welsh business tenancy” means a business tenancy comprising premises in Wales.

3“Protected rent debt”I1

(1)

A “protected rent debt” is a debt under a business tenancy consisting of unpaid protected rent.

(2)

Rent due under the tenancy is “protected rent” if—

(a)

the tenancy was adversely affected by coronavirus (see section 4), and

(b)

the rent is attributable to a period of occupation by the tenant for, or for a period within, the protected period applying to the tenancy (see section 5).

(3)

Rent consisting of interest on an unpaid amount within section 2(1)(a) or (b) is to be regarded for the purposes of subsection (2)(b) as attributable to the same period of occupation by the tenant as that unpaid amount.

(4)

A period of occupation by the tenant that began, or ended, at a time during a particular day is to be treated as including the whole of that day.

(5)

If any rent due under the tenancy is attributable to a period of occupation by the tenant of which only part is of the description in subsection (2)(b), then so much of the rent as can be reasonably attributed to that part of the period is protected rent.

(6)

An amount treated by section 2(4) as unpaid rent is to be regarded as unpaid protected rent if the rent debt that was satisfied (in whole or part) by drawing it down from the tenancy deposit would otherwise have been a protected rent debt.

4“Adversely affected by coronavirus”I1

(1)

A business tenancy was “adversely affected by coronavirus” for the purposes of section 3(2)(a) if, for any relevant period—

(a)

the whole or part of the business carried on by the tenant at or from the premises comprised in the tenancy, or

(b)

the whole or part of those premises,

was of a description subject to a closure requirement.

(2)

For this purpose—

(a)

“closure requirement” means a requirement imposed by coronavirus regulations which is expressed as an obligation—

(i)

to close businesses, or parts of businesses, of a specified description, or

(ii)

to close premises, or parts of premises, of a specified description; and

(b)

“relevant period” means a period beginning at or after 2 p.m. on 21 March 2020 and ending at or before—

(i)

11.55 p.m. on 18 July 2021, for English business tenancies, or

(ii)

6 a.m. on 7 August 2021, for Welsh business tenancies.

(3)

A requirement expressed as an obligation to close businesses or premises of a specified description, or parts of businesses or premises of a specified description, every day at particular times is to be regarded for the purposes of subsection (2)(a) as a closure requirement.

(4)

It is immaterial for the purposes of subsection (2)(a) that specific limited activities were (as an exception) allowed by the regulations to be carried on despite the obligation to close (and accordingly the fact they were permitted or carried on is to be disregarded in determining whether the tenancy was adversely affected by coronavirus).

(5)

Where the premises comprised in the tenancy were occupied by the tenant for the purposes of a business not carried on solely at or from those premises, the reference in subsection (1)(a) to the business carried on at or from the premises is to so much of the business as was carried on at or from the premises.

(6)

In this section “coronavirus regulations” means regulations—

(a)

made under section 45C of the Public Health (Control of Disease) Act 1984 (whether or not also made under any other power), and

(b)

expressed to be made in response to the threat to public health posed by the incidence or spread of coronavirus.

5“Protected period”I1

(1)

The “protected period”, in relation to a business tenancy adversely affected by coronavirus, is the period beginning with 21 March 2020 and ending with—

(a)

where the business tenancy comprises premises in England—

(i)

if subsection (2) identifies a day earlier than 18 July 2021, that day, or

(ii)

in any other case, 18 July 2021;

(b)

where the business tenancy comprises premises in Wales—

(i)

if subsection (2) identifies a day earlier than 7 August 2021, that day, or

(ii)

in any other case, 7 August 2021.

(2)

The relevant day for the purposes of subsection (1)(a)(i) or (b)(i) is the last day on which (or for part of which)—

(a)

the whole or part of the business carried on by the tenant at or from the premises, or

(b)

the whole or part of those premises,

was of a description subject to either a closure requirement or a specific coronavirus restriction.

(3)

In subsection (2) “specific coronavirus restriction” means a restriction or requirement (other than a closure requirement) imposed by coronavirus regulations which regulated any aspect of—

(a)

the way a business, or a part of a business, of any specified description was to be carried on, or

(b)

the way any premises, or any part of premises, of a specified description were or was to be used.

(4)

But for the purposes of subsection (3)—

(a)

requirements to display or provide information on premises (or parts of premises), and

(b)

restrictions applying more generally than to specific descriptions of businesses or premises (or parts of businesses or premises),

are not specific coronavirus restrictions.

(5)

In this section “closure requirement” and “coronavirus regulations” have the same meaning as in section 4.

6“The matter of relief from payment”I1

(1)

References to the matter of relief from payment of a protected rent debt are to all issues relating to the questions—

(a)

whether there is a protected rent debt of any amount, and

(b)

if so, whether the tenant should be given relief from payment of that debt and, if so, what relief.

(2)

“Relief from payment”, in relation to a protected rent debt, means any one or more of the following—

(a)

writing off the whole or any part of the debt;

(b)

giving time to pay the whole or any part of the debt, including by allowing the whole or any part of the debt to be paid by instalments;

(c)

reducing (including to zero) any interest otherwise payable by the tenant under the terms of the tenancy in relation to the whole or any part of the debt.

25Temporary restriction on initiating certain insolvency arrangementsI1

(1)

This section applies where the matter of relief from payment of a protected rent debt has been referred to arbitration.

(2)

During the relevant period—

(a)

no proposal for a company voluntary arrangement under section 1 of the Insolvency Act 1986 which relates to the whole or part of the debt may be made,

(b)

no proposal for an individual voluntary arrangement under section 256A of that Act, or an application for an interim order under section 253 of that Act, which relates to the whole or part of the debt may be made, and

(c)

no application for a compromise or arrangement under section 896 or 901C of the Companies Act 2006 (court orders for holding of meetings) which relates to the whole or part of the debt may be made.

(3)

In this section “the relevant period” means the period beginning with the day on which an arbitrator is appointed and ending with—

(a)

where the arbitrator makes an award in accordance with section 14, the day which is 12 months after the day on which that award is made,

(b)

where the arbitrator makes an award dismissing a reference under section 13(2) or (3), the day on which that award is made,

(c)

where an award made in accordance with section 14 is set aside on appeal, the day on which that decision is made, or

(d)

where the arbitration proceedings are abandoned or withdrawn by the parties, the day of that abandonment or withdrawal.

(4)

This section, so far as relating to a company voluntary arrangement and a compromise or arrangement under section 899 or 901F of the Companies Act 2006, applies to limited liability partnerships (as well as to companies).

27Temporary restriction on winding-up petitions and petitions for bankruptcy ordersI1 E+W+S

Schedule 3 contains temporary provision in relation to winding up petitions and petitions for bankruptcy orders.

28Power to apply Act in relation to future periods of coronavirus controlI1

(1)

The Secretary of State may by regulations provide for this Act (apart from this section) to apply again in relation to rent debts under business tenancies adversely affected by closure requirements.

(2)

Regulations under this section may—

(a)

be made so as to apply in relation to—

(i)

English business tenancies,

(ii)

Welsh business tenancies, or

(iii)

English business tenancies and Welsh business tenancies;

(b)

exclude the provisions mentioned in subsection (10) (a) to (c) from the provisions being re-applied in relation to Welsh business tenancies.

(3)

A business tenancy is adversely affected by a closure requirement for the purposes of subsection (1) if—

(a)

the whole or part of a business carried on at or from the premises comprised in the tenancy, or

(b)

the whole or part of those premises,

is of a description subject to a closure requirement imposed at any time after 7 August 2021.

(4)

In this section “closure requirement” means a requirement imposed by regulations as a public health response to coronavirus and expressed as an obligation—

(a)

to close businesses, or parts of businesses, of a specified description, or

(b)

to close premises, or parts of premises, of a specified description.

(5)

In subsection (4) “coronavirus” means severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2).

(6)

The power under this section is exercisable whether or not the closure requirement remains in force when the regulations are made.

(7)

Subsections (3) to (5) of section 4 apply for the purposes of this section as they apply for the purposes of section 4.

(8)

Regulations under this section may—

(a)

provide for provisions of this Act to apply with such necessary modifications as are specified in the regulations;

(b)

make different provision for England and for Wales;

(c)

make incidental, supplemental, consequential, saving or transitional provision (including provision amending or otherwise modifying an Act of Parliament).

(9)

For the purposes of subsection (8)(a)—

(a)

“modifications” means omissions, additions or variations, and

(b)

modifications are “necessary” if they appear to the Secretary of State to be necessary for the provisions being re-applied to operate correctly in relation to business tenancies adversely affected by the closure requirements in question.

(10)

The power under this section is exercisable only with the consent of the Welsh Ministers so far as it relates to the re-application, in relation to Welsh business tenancies, of—

(a)

Schedule 2 apart from paragraph 3(6) and (7),

(b)

section 23 so far as relating to Schedule 2 apart from paragraph 3(6) and (7), and

(c)

Part 1 and this Part, so far as relating to the provisions mentioned in paragraphs (a) and (b).

(11)

Regulations under this section—

(a)

are to be made by statutory instrument, and

(b)

may not be made unless a draft of the statutory instrument containing them has been laid before and approved by a resolution of each House of Parliament.

29Concurrent power for Welsh Ministers to apply moratorium provisions againI1

(1)

The Welsh Ministers may exercise the power conferred by section 28, concurrently with the Secretary of State, so far as it relates to the re-application, in relation to Welsh business tenancies, of—

(a)

Schedule 2 apart from paragraph 3(6) and (7),

(b)

section 23 so far as relating to Schedule 2 apart from paragraph 3(6) and (7), and

(c)

Part 1 and this Part, so far as relating to the provisions mentioned in paragraphs (a) and (b).

(2)

Section 28 has effect in relation to regulations made by the Welsh Ministers by virtue of this section as if—

(a)

references to the Secretary of State were to the Welsh Ministers,

(b)

subsection (2)(a)(i) and (iii) and (b) were omitted,

(c)

in subsection (8)—

(i)

the references in paragraph (a) to provisions of this Act were references to provisions mentioned in subsection (1)(a) to (c) above, and

(ii)

the reference in paragraph (c) to an Act of Parliament included a reference to an Act or Measure of Senedd Cymru,

(d)

subsection (10) were omitted, and

(e)

in subsection (11)(b), for “each House of Parliament” there were substituted “Senedd Cymru”.

(3)

In Schedule 7B to the Government of Wales Act 2006 (general restrictions on legislative competence of Senedd Cymru), in paragraph 11(6)(b) (exceptions to restrictions relating to Ministers of the Crown)—

(a)

omit the “or” at the end of paragraph (vi), and

(b)

after paragraph (vii) insert

“; or

(viii)

section 28 of the Commercial Rent (Coronavirus) Act 2022.”

30Crown applicationI1

This Act binds the Crown (but without prejudice to section 2(5) which secures that the business tenancies to which this Act applies are those to which Part 2 of the Landlord and Tenant Act 1954 applies).

31Extent, commencement and short titleI1

(1)

Parts 1 to 3 extend to England and Wales only (except as provided by subsections (2) and (3)).

(2)

The following provisions extend to England and Wales, Scotland and Northern Ireland—

(a)

in section 25—

(i)

subsections (1), (2)(c) and (3), and

(ii)

subsection (4) so far as relating to a compromise or arrangement under section 899 or 901F of the Companies Act 2006,

(b)

Part 1 so far as relating to the provisions mentioned in paragraph (a), and

(c)

this Part.

(3)

The following provisions extend to England and Wales and Scotland only—

(a)

in section 25—

(i)

subsection (2)(a), and

(ii)

subsection (4) so far as relating to a company voluntary arrangement,

(b)

paragraph 1 of Schedule 3 and section 27 so far as relating to that paragraph, and

(c)

Part 1 so far as relating to the provisions mentioned in paragraphs (a) and (b).

(4)

This Act comes into force on the day on which it is passed (except as provided by subsection (5)).

(5)

Paragraph 1 of Schedule 3, and section 27 so far as relating to that paragraph, comes into force on 1 April 2022.

(6)

This Act may be cited as the Commercial Rent (Coronavirus) Act 2022.

1Prohibition on presenting a winding-up petition solely in relation to a protected rent debtI1 E+W+S

(1)

This paragraph applies where a landlord under a business tenancy is owed a protected rent debt and the tenant is a company.

(2)

The landlord may not, during the moratorium period for the debt, present a petition for the winding up of the company under section 124 of the Insolvency Act 1986 on a ground specified—

(a)

in the case of a registered company, in section 122(1)(f) of that Act, or

(b)

in the case of an unregistered company, in section 221(5)(b) of that Act,

unless the landlord is owed a debt by the company which is not a protected rent debt.

(3)

In this paragraph—

  • “the moratorium period”, in relation to a protected rent debt, has the same meaning as in section 23;

  • “registered company” means a company registered under the Companies Act 2006 in England and Wales or Scotland;

  • “unregistered company” has the same meaning as in Part 5 of the Insolvency Act 1986.

(4)

This paragraph, so far as relating to registered companies, applies to limited liability partnerships.