A new law is now in place to help resolve certain remaining commercial rent debts accrued because of the pandemic, Business Minister Paul Scully has announced today (Thursday 24 March).

The ‘Commercial Rent (Coronavirus) Act 2022’ received Royal Assent today. This means that from today a legally binding arbitration process will be available for eligible commercial landlords and tenants who have not already reached an agreement. This will resolve disputes about certain pandemic-related rent debt and help the market return to normal as quickly as possible.

The law applies to commercial rent debts of businesses including pubs, gyms and restaurants which were mandated to close, in full or in part, from March 2020 until the date restrictions ended for their sector. Debts accrued at other times will not be in scope.

The law comes into force today in England and Wales.

Business Minister Paul Scully said:

This new law will give commercial tenants and landlords the ability to draw a line under the uncertainty caused by the pandemic so they can plan ahead and return to normality.

Landlords and tenants should keep working together to reach their own agreements where possible using our Code of Practice to help them, and we’ve made arbitration available as a last resort. Tenants who can repay their rent debts in full, should do so, and when they cannot, landlords should try to share the burden, so we can all move on.

The government encourages commercial landlords and tenants to negotiate their own agreement where possible, so that an arrangement to resolve debt is mutually agreed, instead of resorting to the arbitration process.

Today is the last day of the general moratorium on commercial evictions and restrictions on Commercial Rent Arrears Recovery (CRAR) in England and Wales, but eligible firms remain protected for the next 6 months during which arbitration can be applied for or until the conclusion of an arbitration.

The moratorium has provided firms with breathing space to negotiate how to address the cost of commercial rent debts caused by the pandemic before the new law came into place.

Last year, the government published an updated Code of Practice to provide commercial landlords and tenants with a clear process for settling outstanding debts. The Code sets out that tenants who can pay their rent debt in full should do so, and that in the first instance, tenants unable to pay in full should negotiate with their landlord in the expectation that the landlord shares the burden where they are able to do so, and only as far as necessary, by waiving some or all rent arrears or giving time to pay.

The Code of Practice applies across the UK. The ‘Commercial Rent (Coronavirus) Act’ applies to England and Wales. Scotland has adopted an alternative approach to commercial evictions since the start of the pandemic, due to different property legislation and market conditions.

For those tenancies that fall within scope of the Act and have failed to reach agreement, either party can apply for arbitration unilaterally, as a backstop after negotiations have failed. Parties are free to continue to negotiate outside of the legal arbitration process. The Code signposts tenants and landlords to forms of alternative dispute resolution, such as mediation, if they wish to pursue this.

The window to apply for arbitration will be six months from the date legislation comes into force. Arbitrators may award a reduction of protected rent debt and/or time to pay, with a maximum period to repay of 24 months.

The legal arbitration process will be delivered by arbitrators appointed by approved arbitration bodies from a list of suitable and available arbitrators.

Arbitration bodies will have to go through an approval process to demonstrate their suitability to administer the scheme. BEIS will publish a list of approved arbitration bodies in due course, and where a dispute is eligible, landlords or tenants will be able to apply directly to any approved arbitration body to appoint an arbitrator.

BEIS and DLUHC will also issue further guidance to landlords and tenants as well as to arbitrators on how the process will work for all parties.

Minister for Rough Sleeping and Housing Eddie Hughes and West Midlands Combined Authority (WMCA) Mayor Andy Street today met a number of people in Walsall who are benefitting from the region’s successful Housing First pilot (24 March 2022).

Backed by £9.6 million government funding the WMCA pilot gives people who have experienced rough sleeping a home with intensive support for problems such as mental, psychological, or emotional ill health, drug or alcohol dependency, or experience of domestic violence and abuse.

Unlike other schemes, housing is provided regardless of whether people take up the support that is offered. They are given a choice about where to live, the services on offer to them and whether they wish to use them, and the evidence has shown that this leads to positive outcomes.

Minister for Rough Sleeping and Housing Eddie Hughes said:

Walsall has shown that the Housing First model works for people who have been stuck in a cycle of rough sleeping for years.

The tenants we met today have shown the importance of having a safe place to call their own as they help to address the trauma, addiction, and mental health issues they may face and to begin to turn their lives around.

Housing First is one of a range of measures put in place to end rough sleeping including our Rough Sleeping Initiative and the Rough Sleeping Accommodation Programme.

Housing First principles were introduced in England in 2016, after success in America, Canada, and in European countries including Denmark, France, and Finland and were a government manifesto commitment announced in the 2017 Autumn budget.

In 2018, £28 million was allocated to the West Midlands (WMCA), Greater Manchester (GMCA) and Liverpool City Region (LCRCA) and pilots were set up to test, if this type of intervention could be successful in supporting England’s most entrenched rough sleepers.

The pilots now in their fifth year have cumulatively supported over 1,000 of the most entrenched rough sleepers across 23 Local Authorities. Without provision such as Housing First, these individuals would not be in accommodation. A comprehensive external evaluation of the pilots will be published in full in 2023.

Peter (54) was a drug user with a history of depression and was homeless after not coping with the loss of family members. He was given a Housing First flat in 2020.

If it weren’t for Housing First, I would still be on the streets begging, sleeping rough. Having people urinate on me, try and beat me up and try and set me on fire.

Having my own place is absolutely heaven – I haven’t got any worries and I get a lot of support, if it weren’t for this scheme and my support worker I’d probably be dead.

Andy Street, Mayor of the West Midlands, added:

Since day one as Mayor I have made tackling homelessness and rough sleeping a top priority.

That’s why I was so determined to secure a Housing First pilot for the West Midlands, and why I am delighted it has proved such a success with more than 500 rough sleepers helped into a home of their own.

Where Housing First has proved such a breakthrough initiative is in the way in which it not only provides a home for people to call their own, but also the wrap-around support that allows some of society’s most vulnerable people to tackle their demons and move forward in life.

We know the country’s finances are challenged and difficult decisions have to be taken, but I am hopeful that the pilot’s success in the West Midlands will lead to the government extending our Housing First scheme and ultimately allow us to help more vulnerable people across the region into a home of their own.

Councillor Adrian Andrew, Deputy Leader of Walsall Council said:

We’re really proud of what has been achieved in Walsall to date in partnership with GreenSquareAccord and Walsall Housing Group.

The Housing First model doesn’t just change lives for the better — it’s my firm view that it has saved lives too. Our strong partnership is key to this success story.

Walsall Housing Group Corporate Director of Operations Fay Shanahan said:

By working with our partners in Walsall we have been able to make a real difference to the lives of people struggling with homelessness.

We have had huge success in supporting rough sleepers to sustain their tenancies, proving how the Housing First approach of combining a stable home with tailored support really works.

Paul Wright, Director of Specialist Support at GreenSquareAccord, said:

This innovative pilot scheme doesn’t just help homeless people into accommodation of their own, but it enables us to offer specialist and targeted ongoing support. Four years into the programme, we have housed and supported over 100 rough sleepers and have had no tenancy failures.

The joined-up approach that has been adopted between the local council, landlords and us as support provider, all working together, has helped to make this a fantastic success.

The West Midlands pilot is the first in the country to exceed its target of bringing 500 people off the street and into Housing First accommodation.

The pilot has provided funding for Housing First to be delivered across the seven WMCA region areas and supported the following number of people in each area:

• Birmingham – 175
• Walsall – 102
• Solihull – 25
• Wolverhampton – 50
• Coventry – 67
• Dudley – 38
• Sandwell – 58