By March 25th 2022, James Picknell, Real Estate Disputes Partner, predicts that the much anticipated legislation will be in force to help tackle the significant amount of unpaid commercial
rent arrears accrued during the pandemic. The Commercial Rent (Coronavirus) Bill is currently passing through parliament. It will provide a set period of time during which landlords and tenants will be able to refer their disputed arrears to an arbitrator for determination. Only certain arrears, accrued by businesses which were required to close during the pandemic, will qualify to be addressed by the new law, which will sit alongside the recently published updated Code of Practice for Commercial Property Relationships following the Covid-19 pandemic.
As for business rates, the pandemic relief for retail, hospitality, and leisure sectors will continue into the new year, reducing from 100% relief to 50% from April 2022 through to March 2023.
But Emily Wood, Real Estate Disputes Group Head, warns relief will be capped at £110,000 per business, and the government has now included provisions in the Rating Coronavirus Director’s Disqualification Dissolved Companies Bill to stop any business rates appeals based on the pandemic amounting to a material change in circumstances, which many office tenants in particular had pursued. Instead, the government will be creating a £1.5 billion “pot” from which local authorities can distribute awards to businesses according to which sectors have suffered most in their area.
Turning to commercial leases themselves, most already provide for the rent to be suspended for a limited period in the event of damage caused by an insured risk. One major change as a result of the pandemic has been the extension of those provisions in some new and renewal commercial leases to circumstances when the property cannot be used for a reason relating to a pandemic rent suspension clause.
Jonathan Crook, DMH Stallard’s Commercial Property Transaction Partner, is certain that these types of clauses are here to stay and advises that “tenants should raise the issue at heads of terms stage to avoid debate and delay later in the transaction”.
Another issue that we expect relates to energy efficiency legislation. From April 1st 2023, a landlord of a commercial property will not be able to continue to let that property if it is sub-standard (with limited exceptions).
Jonathan advises, “Landlords need to look at their portfolios now to work out whether works need to be carried out and well-advised tenants will also be careful to carve out of new leases any obligation in respect of these type of works or their cost.”
The new Environment Act 2021 contains obligations on property owners and developers likely to become law sometime in 2023. Planning partner, Chloe Karamian, thinks the new net gain biodiversity requirements for new developments is going to be a particular hot topic for the future. She is expecting to see many more green roofs, green walkways, street trees, hedgehog highways and wildlife/bat boxes included in future developments. Finally, Emily Wood predicts the reinvigorated green agenda means a change in approach to dilapidations is on the horizon. As we are encouraged to upcycle, recycle, and reuse, there is inevitable pressure on landlords to explore more sustainable green approaches at lease end.
DMH Stallard’s Real Estate Team is known for their “First rate legal minds. Highly efficient and organized in their dealings. Immensely personable.”
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If you would like advice on any commercial property matter, please e-mail enquiries@dmhstallard.com
