Written Statement: Moratorium on forfeiture for non-payment of rent on business tenancies

The Coronavirus Act 2020 (the Act) grants Welsh Ministers with emergency powers to handle the COVID-19 pandemic. The Act received Royal Assent on 25 March 2020.

Section 82 of the Act introduced provisions that a right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent may not be enforced, by action or otherwise, during the “relevant period”. The end of the “relevant period” for this provision was initially 30 June 2020.  Subsequently, Welsh Ministers agreed to extend the moratorium on a number of occasions. Most recently, the “relevant period” was extended in relation to Wales until 30 September 2021 by The Business Tenancies (Extension of Protection from Forfeiture etc) (Wales) (Coronavirus) (No. 2) Regulations 2021.

The moratorium was introduced for reasons including limiting the significant impact on businesses from the series of interventions and restrictions imposed on the Welsh economy throughout the pandemic.

The UK Government has announced its intention to introduce legislation to ring-fence commercial rent debt accrued during the pandemic. It is anticipated that this will include principles which landlords and tenants of business tenancies should use to negotiate on the same and the introduction of a system of binding arbitration where agreement between tenants and landlords cannot be reached.

The UK Government also announced that they have:

• Extended the “relevant period” in England to 25 March 2022, which it is expected will also allow for UK Parliamentary time to pass the necessary primary legislation.
• Extended the restrictions on the use of commercial rent arrears recovery (CRAR) so that, from the 24 June 2021, the minimum net unpaid rent that must be outstanding before CRAR can be used is 554 days.
• Extended the restrictions against serving a winding-up petition on the basis of a statutory demand implemented through the Corporate Insolvency and Governance Act 2020 until 30 September 2021.

I have decided to extend the “relevant period” for the purposes of section 82 of the Act in relation to Wales to 25 March 2022 by making The Business Tenancies (Extension of Protection from Forfeiture etc) (Wales) (Coronavirus) (No. 3) Regulations 2021. This will give the same levels of protection in this respect for Welsh businesses as those in England, and will assist with the recovery of Welsh businesses as the economy improves. It will also provide the Welsh Government with what is believed to be sufficient time to continue to work in considering and then where necessary, implementing measures in relation to commercial rent arrears accumulated during the pandemic in Wales. It is expected that this will include working with the UK Government in the further consideration and development of their proposals

The protection provided by section 82 of the Act during the “relevant period” does not remove the requirement to pay rent, and I am clear that, wherever possible, tenants should of course pay rent.

This statement is being issued during recess in order to keep members informed. Should members wish me to make a further statement or to answer questions on this when the Senedd returns I would be happy to do so.