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12 November 202139 minute read

Commercial Rent (Coronavirus) Bill

New legislation to deal with COVID-19 rent arrears

The Government has published its draft legislation with the aim of tackling accrued rent arrears for businesses who were forced to close during the pandemic. The Commercial Rent (Coronavirus) Bill provides for the ringfencing of rent debt built up by businesses who have been forced to close during the pandemic and establishes a binding arbitration process which can determine what happens to that ringfenced debt.

Concurrently, the Government has published a revised Code of Practice to be used by landlords and tenants in order to resolve disputes in relation to unpaid rent arrears. The revised Code replaces the previous version, first introduced in June 2020.

As with any draft legislation, the new Bill is subject to passage through Parliament and the details of the Bill may be subject to alteration or change. The Government's aim is to have the Bill passed by 25 March 2022, subject to Parliamentary approval.

There are a number of features of the Bill which are subject to interpretation and require further clarity. These areas may be resolved as the Bill passes through Parliament. Failing that, matters of interpretation will ultimately be left to the courts, which is not an ideal scenario for landlords or tenants.

Absent further guidance from the Government, the arbitrators themselves will have a very wide discretion as to how to determine disputes, including whether to dismiss the referral to arbitration at the outset if they consider the dispute does not meet the strict Bill criteria. This creates significant uncertainty for landlords and tenants as to what the result of any arbitration process might be.

Whilst the arbitration award (which of itself is binding in nature between landlord and tenant) will need to be published with reasons; different arbitrators may reach different conclusions on similar facts and their awards will not act as authority to bind other arbitrators.

Key to their decision making (and further guidance is promised as the Bill progresses through Parliament) will be the need for arbitrators to assess whether, but for unpaid rent debt, the tenant's business would be viable – a difficult ask, subjectively dependent on financial disclosure and one which does not necessarily involve property considerations. An assumption has been made that there are sufficient numbers of arbitrators with the necessary skillsets to determine disputes willing to work at Government capped fee rates – this remains to be seen.

Why is the new legislation needed?

Whilst there is indication that, overall, rent collection is increasing, it remains below average levels especially in certain sectors. The Government's impact assessment for the Bill, using HM Treasury modelling, suggests that there are approximately 210,000 tenant businesses that may have deferred (aggregate) rent of approximately GBP1.5bn and who have not yet come to an agreement with their landlords on resolving the unpaid arrears.

The Government is of the view that its latest intervention, will protect businesses from insolvency and workers from redundancies by securing a positive resolution to these rent arrears.

The Government has sought to encourage landlords and tenants to reach consensual solutions, but it is recognised that there are situations where parties are not going to be able to reach agreement by themselves. The binding arbitration process contained in the Bill will provide a legal avenue for those landlords and tenants who have been unable to reach agreement, to have their claim (where it is in scope) considered in a proportionate way.

What does the Bill do?

Once the Bill becomes law, it will introduce a system of binding arbitration with the aim of supporting the resolution of certain commercial rent debt accrued during the pandemic. The arbitration process incorporates and builds on provisions from the existing Arbitration Act 1996 which will apply, as modified, including provisions dealing with the general duty of the arbitrator and of the parties, immunity of the arbitrator, procedural and evidential matters, settlement of cases, the effect of an award, enforcement of the award and appeals.

The Bill also introduces a moratorium on the use of certain remedies and measures whilst the application period for arbitration is open or arbitration under the legislation is in progress.

The new legislation once enacted will apply to England and Wales. Northern Ireland will have a power to make similar legislation. It will not apply substantively to Scotland but the Code will still be expected to be adhered to where appropriate.

Who is eligible to use the arbitration scheme and what rent is within the scope of the same?

The Bill presently applies to tenants which were mandated to close their premises (in whole or in part) or cease trading under coronavirus regulations; and who lease their premises under a business tenancy. In relation to those tenants, it is only unpaid rent arrears relating to a defined ringfenced period which are the subject of the Bill and which are capable of being referred to arbitration.

Business tenancy is defined as a tenancy to which Part II of the Landlord and Tenant Act 1954 applies (the Coronavirus Act 2020 uses a similar definition), and with some possible exceptions, will broadly apply to leases and underleases (where the premises is occupied by the tenant for business purposes). It is expected that "contracted out" leases will be considered to be business tenancies because Part II of the Landlord and Tenant Act 1954 applies to these tenancies (it is only sections 24 to 28 of the 1954 Act that are excluded by the contracting out process) but licences to occupy will fall outside the definition.

Sectors which were subject to mandatory closures include (amongst others) hospitality and nightclubs; non-essential retail; theatre and cinemas and personal care (including hairdressers). Pure office-based businesses, for example, those tenants in the business services sector will generally be outside the scope of the Bill, with Government guidance to work from home not (by itself) satisfying the eligibility criteria for the arbitration scheme – in scope tenants (amongst others) must have been mandated to close their premises (in whole or in part) or cease trading. A requirement that premises close at particular times every day is to be regarded as a closure requirement.

Rent arrears for the purposes of the Bill comprise not just rent, but also service charges and insurance, where it is payable to the landlord or a representative of the landlord (for example, a managing agent) together with any interest and VAT on such amounts, for the ringfenced period.

It appears that the Bill also extends to arrears that relate to a contribution towards the costs of serving and maintaining common parts whether or not such costs are recoverable via the service charge mechanism in the lease.

The ringfenced period is from 21 March 2020 to the last date that restrictions were removed from the business tenant's sector. Relevant restrictions are those imposed by regulation that relate to the way in which business could be used or premises could operate. Premises that were able to continue trading and were not forced to close, for example pharmacies, are not within scope of the legislation. A summary of the ringfenced periods and the businesses affected by the Bill is included at Annex A to the Code.

The Code gives the examples of a clothing shop in England where the ring-fenced period is from 21 March 2020 to 12 April 2021 (when non-essential retail was allowed to re-open); and a café in England, where the ring-fenced period is from 21 March 2020 to 18 July 2021 (when restrictions ended on table booking size and requirement for customers to eat while seated).

It would appear that any periods during the pandemic when tenants were permitted to re-open before being required to close again as restrictions were re-introduced will be treated as part of the overarching protected period.

Business tenancies which were in place for some or all of the ring-fenced period but which have since ended, provided they meet the other criteria for inclusion, are in scope.

The Government estimates that of the tenant businesses that may have deferred rent and not yet come to an agreement with their landlords on resolving the unpaid arrears, there are only about 50,000 businesses that were mandated to close their premises or cease trading; and that the deferred rent within the scope of the new legislation is approximately GBP0.45bn.

Any rent debts owed by an eligible tenant which fall outside the scope of the Bill (i.e. do not relate to the ringfenced period) remain payable in full, although it is important to note that that the current restrictions on forfeiture and Commercial Rent Arrears Recovery (CRAR) still remain in place until 25 March 2022, as do the restrictions on winding up petitions in relation to rent arrears incurred under business tenancies unpaid due to the pandemic, which remain in place until 31 March 2022.

Consequently, it will be important for landlords and tenants with unresolved arrears to assess quickly whether they are in the scope of the Bill and have access to the arbitration scheme; and plan how to tackle their negotiations.

What happens if a tenant or occupier of leased premises is not within the scope of the Bill?

The Government's impact assessment suggests that approximately 30% of businesses are in scope for the purposes of the Bill, meaning that a significant number of businesses will have been impacted by COVID-19 but will not be able to use the arbitration scheme to resolve continuing rent disputes.

For these businesses, the Government is encouraging landlords and tenants to come together to use the principles and methods set out in the Code to negotiate and come to an agreement on outstanding rent arrears that protect the viability of the tenant's business, which it argues will benefit the landlord (and the wider economy). We expect that some business owners will feel aggrieved that, having chosen to close, perhaps to protect the health and safety of employees and customers or simply because it was uneconomic to stay open with reduced footfall, are now being disadvantaged.

What happens if a landlord and tenant have already reached agreement in relation to in scope rent arrears?

Where parties have already come to an agreement dealing with what would otherwise be in scope arrears, such arrears are deemed to be out of scope for the purposes of the Bill, so that neither the landlord nor the tenant can refer such arrears for arbitration. This may be an area where further guidance is needed from the Government to provide clarity on what constitutes an agreement resolving an outstanding rent arrears position and/or whether arrears can come back into scope if an agreement has been terminated or there is a default under the same.

Nothing in the Bill affects the ability of tenants and landlords at any time to reach agreement on the payment of a protected rent debt (or any other matter relating to a tenancy), and of such an agreement having effect and being enforced.

What is the binding arbitration process?

Either the landlord or the tenant can refer a dispute to arbitration within 6 months (or if extended, such later period) of the Bill being enacted. If Parliament passes the Bill by its intended date of 25 March 2022, then a referral would (in the absence of any extension) need to be made on or before 25 September 2022.

Arbitrators who determine rent arrears cases under the new scheme must be approved by the Government, in accordance with guidelines to be set out in the legislation. The Government will publish a list of approved bodies on the website of the Department for Business, Energy and Industrial Strategy (BEIS) in due course, and parties will be expected to apply directly to an approved arbitration body.

A referral to arbitration under the Bill is to be made to such approved arbitration body. The process is expected to operate as follows:

  1. Pre-application letter of notification: the landlord or tenant must notify the other party of its intention to pursue binding arbitration. At this point the party will be expected to submit a proposal for settlement of rent arrears accrued during the relevant period, supported by any appropriate evidence of affordability.
  2. The other party can respond and can either accept the proposal made or submit a counterproposal. If the respondent is a landlord, it will not have to supply evidence of its financial position but should note that this may be considered at arbitration. The initiator will then have a period of time to respond, which could include submitting a new proposal if it chooses to.
  3. An application by either the landlord or the tenant together with a fee: the application for arbitration must include the (above) notification sent during the pre-application stage, its proposal for resolution and relevant supporting evidence, including on viability and affordability in the case of a tenant (see below).
  4. The responding party will then have 14 days to submit its own proposal, together with any supporting evidence. Following that, the parties will have the opportunity to submit revised proposals for what the arbitrator's award should be. The arbitrator will have the power to request further evidence from either party.
  5. Both the landlord and tenant will then be given the choice of a public hearing or, if neither party asks for a hearing, the arbitrator will consider the matter on paper based on the documentation provided.
  6. The arbitrator will seek to conduct a hearing no more than 14 days from the receipt of a request for one.
  7. The arbitrator will consider its decision based on the written evidence and any hearing and notify parties, within 14 days of a hearing or otherwise as soon as reasonably practicable, of the award made. The arbitrator's award will be legally binding.

Any written statement provided to the arbitrator must be signed by the person giving that evidence with a statement of truth which is assumed to mean the statement of truth required under the Civil Procedure Rules in court proceedings for court documents. Under such rules it is cautionary to highlight that a party who signs a statement of truth without an honest belief in the truth of matters stated can be liable for contempt of court.

How will an arbitrator make its decision?

The Bill sets out two key principles which the arbitrator must take into account when making any decision under the arbitration process. These are to achieve the aim of protecting viable businesses by potentially giving tenants relief in respect of the protected rent debt.

The principles are:

  1. Any award should aim to preserve the viability of the tenant's business so long as this does not prejudice the landlord's solvency - the preservation of the viability of the business of the tenant should not be at the expense of the solvency of the landlord.
  2. A tenant that is capable of paying the protected rent debt in full should do so without delay - any relief should be no greater than necessary for the tenant business to afford the payment.

The viability of the tenant is a key gating requirement for that tenant to be eligible for rent concessions. An arbitrator is required to dismiss a referral to arbitration if it has assessed the viability of the tenant's business and found that, at the time of the assessment, the business is not viable and would not be viable even if the tenant was given relief from payment of any kind.

Where a tenant can prove that it cannot afford to pay all its rent debt, but also can prove that its business would be viable (if a reduced payment was made provided that the effect did not render the landlord insolvent), the tenant should be entitled to rent concessions.

The Bill sets out matters which an arbitrator must consider when determining the viability of a tenant's business, and the solvency of a landlord. The arbitrator must disregard the possibility of borrowing money or a restructuring of the business. The Government anticipates providing further guidance to assist arbitrators once the Bill has passed through Parliament.

The arbitrator is required to consider the proposals put forward by the parties against the above core principles. Where only the proposal of one of the parties is consistent with the principles, the arbitrator is required to adopt that in the award. Where the proposals of both parties are consistent with the principles, the arbitrator must adopt the one it considers is most consistent. Where neither party's proposal is consistent, the arbitrator must make whatever award it considers is appropriate.

Parties should therefore take care to engage constructively and in accordance with the core principles to ensure their proposals will be considered by the arbitrator – if not, the other party's proposal may automatically be imposed, provided that it complies with the core principles. This focus, one would hope, ought to encourage many agreements outside of the formal arbitration process.

What decisions can be made by the arbitrator?

In cases where the arbitrator determines that the matter has already been resolved by agreement before the referral to arbitration was made; or the tenancy in question is not a business tenancy; or if the tenant is not determined to be viable (see above); or that there is no protected rent debt, then the arbitrator is required to dismiss the referral.

Where the arbitrator is satisfied with the viability of the tenant, the arbitrator is required to consider whether the tenant should receive any relief from payment of a protected rent debt and if so, what kind of relief.

Under the Bill, relief from payment in relation to a ringfenced rent debt can take the form of any of the following:

  1. writing off the whole or part of the debt;
  2. giving additional time to pay the debt or allowing the debt to be paid in instalments – payment must be within 24 months; and
  3. reducing or cancelling the interest owed in relation to the debt.

Relief from payment may be any one or a combination of these.

Once a decision has been made, the arbitrator is required to publish an award made under the Bill and the reasons for making it (albeit, any such publication cannot include confidential or commercially sensitive information).

Is there any right of appeal or challenge in respect of a decision?

If a business applies to have its case considered under the arbitration process and a decision is made by an arbitrator, that decision will be legally binding. Grounds for appeal are very limited – under the Arbitration Act 1996 there are three ways in which an arbitration award can be challenged in the English courts:

  1. challenge to the arbitrator's substantive jurisdiction;
  2. challenge on the ground of serious irregularity affecting the arbitration, the proceedings or the award - an award can ordinarily only be challenged if there has been a serious irregularity that has caused or will cause substantial injustice; and
  3. appeal on a point of law.

Under the Arbitration Act 1996, challenges must be brought within 28 days of the date of the arbitrator's award (unless extended by the court in accordance with the court's general case management powers).

Arbitrators generally enjoy qualified immunity and are not liable for anything done or not done when conducting the arbitration, unless this is shown to have been in bad faith.

How are existing forfeiture and recovery restrictions impacted?

No immediate impact. The moratorium on forfeiture of commercial leases and measures regarding CRAR are due to end by 25 March 2022, and protection against winding-up petitions (in certain circumstances) on 31 March 2022.

Once the current protections have been replaced with the new arbitration legislation, it is expected that landlords will be able to exercise their ordinary enforcement rights in the ways they did prior to the current restrictions / moratorium, except where the action is within the scope of the binding arbitration process i.e. it relates to ringfenced rent. Once the current restrictions expire, action should be capable of being taken in relation to:

  1. non-payment of rental arrears incurred prior to March 2020 and from the end of the ringfenced period onwards; and
  2. non-payment of rental arrears accrued at any time, for tenants that fall outside the scope of arbitration legislation.
Will the new legislation have an impact on existing landlord remedies for unpaid rent?

Yes, but only in relation to ringfenced rent debt. The Bill introduces a moratorium on the use of certain remedies and measures whilst the application period for arbitration is open or arbitration under the legislation is in progress. The moratorium period begins on the day that the Bill is enacted (currently expected to be 25 March 2022) and ends either when the arbitration concludes, if the matter is referred to arbitration; or if the matter is not referred to arbitration, the last day of the 6-month period (which may be extended by the Government) in which a matter could be referred to arbitration (the moratorium period).

In addition, where debt claims (for County Court or High Court Judgments) have been initiated after 10 November 2021, they will be stayed if one of the parties applies for it and the claims are not concluded; and where a judgment is made on such claims before the Bill is in force, the debt (that is the subject of the judgment) can be referred to arbitration.

All remedies which are restricted will only be restricted in relation to the ringfenced rent debt. A summary of the temporary measures and restrictions which will be introduced by the Bill (and as they apply in respect of corporate tenants) are set out below:

Option Summary Temporary restriction introduced by the Bill
Forfeiture Non-payment of rent would have exposed a tenant to the risk that a landlord could peaceably re-enter the premises without notice (known in legal terms as forfeiture) and take possession of the premises without court action by changing the locks or taking court action, effectively ending the lease – although relief from the courts could be sought and would be available to tenants if they paid arrears plus the landlord's costs. Forfeiture remains available for non- rent breaches. A landlord will be prevented from enforcing a right under the tenancy to forfeit for non-payment of the protected rent during the moratorium period.

CRAR Commercial Rent Arrears Recovery (or CRAR) replaced the common law remedy of distress for rent arrears recovery in 2014. It allows a landlord to instruct an enforcement agent to take control of a tenant's goods and sell them in order to recover an equivalent value to any rent arrears. A landlord will not be able to use CRAR in relation to a protected rent debt during the moratorium period, this includes the landlord authorising an enforcement agent to act for them.

Statutory Demand (company)

A statutory demand is a written demand for payment of a debt. It has often been used as a quick and relatively inexpensive method for landlords seeking to take action for non-payment of rent. Statutory demands are often issued to seek to pressure debtors into paying the sums due prior to more formal legal action in the form of a winding-up petition, although a landlord is not required to issue a statutory demand before issuing a winding-up petition. landlords seeking to take action for non-payment of rent.

Statutory demands are often issued to seek to pressure debtors into paying the sums due prior to more formal legal action in the form of a winding-up petition, although a landlord is not required to issue a statutory demand before issuing a winding-up petition.

No restrictions.

[Note: there are restrictions on the use of statutory demands by a landlord being made during the moratorium period in respect of a protected rent debt in connection with a bankruptcy petition.]

Winding-up petition A winding-up petition is essentially a court application for a debtor to be put into compulsory liquidation on the grounds that it is unable to pay its debts. A landlord that has not been paid could simply present a winding-up petition at court. Commonly, however, a statutory demand that has not been paid within 21 days is used to establish the debtor's insolvency.

A landlord will not be able to present a winding-up petition on grounds that the company is unable to pay its rent debts during the moratorium period.

A landlord will still be able to present a winding-up petition if they are owed a debt which is not a protected rent debt, as set out in the Bill.

Debt claims / proceedings It is open to a landlord to issue debt proceedings in court to recover unpaid rent. Prior to the restrictions on winding-up petitions and statutory demands, this was an option seldom used by landlords, unless there was some dispute in relation to whether the debt was due and owing (which would make the winding-up petition route unavailable), as it is a more lengthy and costly procedure. Commencing debt proceedings for rent might be more attractive where the tenant has assets over which a charging order could be obtained or it has goods that could be controlled using writs and warrants of control.

The Bill will prevent landlords from issuing debt proceedings (for County Court or High Court Judgments) whilst arbitration is available or ongoing, and enable the debt covered by certain debt proceedings to be considered in arbitration.

In respect of debt claims relating entirely or partly to protected debt which are made on or after 10 November 2021, but before the day on which the Bill is enacted (expected to be 25 March 2022), either the landlord or the tenant can apply for the proceedings on the debt claim to be stayed, so that the payment of the protected rent debt can be resolved through other means including arbitration under the Bill.

If such an application is made, the court is required to stay the proceedings.

If a judgment is made in favour of the landlord in respect of debt proceedings that were commenced on or after 10 November (but before the day on which the Bill is enacted) then if the judgment debt can be resolved through arbitration, the judgment debt may not be enforced until the end of the moratorium period. If relief from payment of a protected rent debt is awarded through arbitration the effect of the judgment debt is deemed to be altered in line with the award.

Administration order A creditor has standing to make an application to court for administrators to be appointed in respect of a company. Once appointed and an order is made a moratorium applies against certain actions against the company without the permission of the Administrator or leave of the Court. However, this is a more costly and complex method than presenting a winding-up petition and has not been commonly used in practice by landlords.

No restrictions.

Rent deposit Many landlords hold a rent deposit on which they can draw when rent is not paid.

Landlords will be prevented from drawing down on tenancy deposits to cover outstanding ringfenced rental arrears.

If, before the moratorium period begins, a landlord has already drawn down on a deposit and used it to cover ringfenced debt, the requirement for the tenant to top-up the deposit will be suspended during the moratorium period.

Under the Bill, unpaid rent includes not only outstanding rent arrears but also any amounts that have been drawn down by the landlord from a tenancy deposit to meet any rent debt. If such sums would otherwise have been treated as ringfenced rent arrears (had they not been paid from amounts drawn down) they will be treated as such under the Bill so an arbitrator can make an award about the full amount. Where the Bill refers to rent being 'paid', in this context it means the tenant making good the shortfall in the deposit.

What is not clear is what happens at the end of the moratorium period to any ringfenced rent which had already been drawn down under a tenancy deposit by the landlord. For example, if the arbitrator decides that the total rent arrears (including the amount drawn-down under the tenancy deposit) should be written off, does this mean that the landlord may potentially have to repay the drawn-down sum to the tenant? The guidance only refers to the tenant being potentially relieved from having to make good any shortfall. If the tenant is relieved from having to make good the shortfall, might the arbitrator have power to vary or terminate the rent deposit deed given that there will be less than the full amount of the deposit remaining (or none remaining at all) and the tenant no longer has any obligation to top it up? Some clarity on this would be helpful.

Guarantee Landlords could also seek to recover rent from any third parties who have guaranteed the tenant's liabilities under the lease.

For the purposes of certain parts of the temporary moratorium on enforcement of protected debts and the temporary restriction on winding-up petitions and petitions for bankruptcy orders, a tenant is stated to include 'a person who has guaranteed a tenant's obligations'.

Accordingly, it appears that the same restrictions on landlords as noted above in relation to debt proceedings and winding up petitions are intended to apply in relation to any relevant action against a guarantor (which relates to ringfenced rent owed by the tenant and which is guaranteed by the guarantor).

Will the new legislation have an impact on a tenant's ability to access restructuring procedures?

Yes. A referral to arbitration cannot be made or progressed when the tenant which owes a protected rent debt is subject to (amongst others):

  1. an approved company voluntary arrangement (CVA) where that CVA relates to any protected rent debt; or
  2. a scheme of arrangement or Part 26A restructuring plan.

In addition, tenants that have entered the arbitration system will be unable to include any ringfenced rent debt in any CVA, Part 26A restructuring plan or scheme of arrangement after an arbitrator is appointed and for a period of 12 months, beginning when the arbitration settlement is awarded.

It will be interesting to see whether landlords refer matters to arbitration as a defensive tactic to avoid in scope rent arrears being compromised in full under a CVA or Part 26A restructuring plan.

How much will this cost?

The Government's intention is that the arbitration process, will be simple and streamlined, enabling cases to conclude rapidly with landlords and tenants to return to business as usual.

The fees payable for arbitration will be set by the approved arbitration bodies and payable in advance. The Secretary of State will have power to set limits of fees, which would aim to be consistent with the market whilst not preventing access from small businesses. Limits are expected to be variable; with a sliding scale, relative to the size of the rental arrears owed, used to determine the cap and ensure it is proportionate for each case.

When an award is made, the arbitrator is required to award half the arbitration fees (or such other amount the arbitrator considers appropriate) to the applicant, to be paid by the other party. An arbitrator is likely to increase the amount of arbitration fees payable by one party where it has not complied with a direction by the arbitrator or if a party has not negotiated in accordance with the Code.

Parties considering arbitration should be mindful that they will be required to meet their own legal and other costs. Currently there is no mechanism in the Bill whereby costs can be awarded by the arbitrator (save for the arbitrators' fees and any expenses the arbitrator incurs).

What happens if the tenant does not comply with an arbitration decision?

If an arbitration award is made by an arbitrator, but the tenant does not subsequently comply with the same, remedies may be exercised by the landlord in the same way as with other unpaid rent under a lease (once the arbitration process is deemed to have been concluded).

How is the Code of Practice intended to be used?

The Code is intended to assist landlords and tenants in resolving disputes relating to rent owed as a result of premises having been closed or otherwise having had business restricted during the COVID-19 pandemic, not just those which are in scope for arbitration under the new Bill. The Code applies to all commercial leases held by businesses which have built up rent arrears, due to an inability to pay, as a result of the impact of the COVID-19 pandemic, whether, for example, in the hospitality, retail (including supply chains), leisure, manufacturing, industrial and logistics, ports, food and drink, or rural sectors.

The Code provides guidance on how parties should approach negotiation, with the intention that where possible they should resolve rent disputes before the Bill comes into force. The Code is proposed to be used by any business to help them negotiate and resolve rent disputes even if they fall outside of scope for arbitration.

Final thoughts…

The Bill is understandably a work in progress with its interpretation in many areas open to debate pending further clarity as the Bill progresses through Parliament and further Government guidelines are issued. For parties looking to use the arbitration process, legal input is likely to be necessary and this will involve a layer of expense over and above the arbitration fee, which (unless the wording of the Bill is changed) will be irrecoverable. The arbitration process is also likely to require considerable administrative and management time for both landlords and tenants, notwithstanding the Government's intention that the arbitration process will be simple and streamlined.

It may be that a positive consequence of the introduction of the Bill is that it encourages landlords and tenants to engage proactively to avoid the uncertain decision and the cost and time consequences that will result from a referral to arbitration.