The Government announced on 9 November 2021 that the Moratorium that the Government introduced during the pandemic to protect tenants from recovery action will come to an end on 25 March 2022. At the same time, a concept of “Ringfenced Debt” will be introduced, along with a Binding Arbitration process where landlords and tenants cannot come to agreement over the treatment of ringfenced debt.

Ringfenced Debt

Ringfenced Debt is defined as arrears of rent and other charges that fell due for payment during periods where the tenant was subject to a Mandated Closure or Restriction.

Please note that debts that relate to the period prior to the onset of Covid restrictions or subsequent to the restrictions being lifted will not be covered by this legislation.

The start of the Ringfenced Period for charges within the scope of this definition is 21 March 2020 in England and Wales, with the last possible date being 18 July 2021 in England and 7 August 2021 in Wales, depending on the tenant’s business type.

Ending of the Moratorium

The ending of the Moratorium means that from 25 March 2022 property owners will be able to use the following procedures in respect of rent arrears that are not Ringfenced:

• Enforcement by Commercial Rent Arrears Recovery (“CRAR”)
• Forfeiture by Peaceable Re-entry
• Proceedings through the County Court
• Statutory Demands leading to Winding-up & Bankruptcy Petitions

Landlords will remain restricted from using these procedures where the arrears qualify as Ringfenced Debt until 24 September 2022, unless an award is made under the Binding Arbitration process.

Binding Arbitration Process

From 25 March 2022, a new Arbitration process will be available for landlords and tenants where no agreement or resolution has been reached in respect of arrears accrued during the pandemic which qualify as Ringfenced Debt.

Referrals to the Arbitration Process can be made by either party between the 25 March 2022 and 24 September 2022.

Further Reading

You can read the Government’s announcement, which includes details of the business types and periods that fall within the scope of Ringfencing on the Government’s website here.

The Federation of Small Businesses has also produced an online guide to help tenants and landlords, which you can read here.