Part 3: Moratorium on Certain Remedies and Insolvency Arrangements
Section 23: Temporary moratorium on enforcement of protected rent debts
- This section introduces Schedule 2, which establishes several provisions to prevent a landlord from taking certain remedies during "the moratorium period" (as defined in subsection (2)) with relation to protected rent debt. The restricted remedies are set out in subsection (1).
- Schedule 2 also makes provision relating to the landlord’s right to appropriate rent during the moratorium period. This means that if the landlord exercises their right to appropriate rent, the payment must be used towards unprotected rent debt before being used towards protected rent debt. Schedule 2 also makes provision relating to debt claims issued before the Act was passed but after 10 November 2021, the date in an announcement of the policy; and for the appropriation of rent debt before the Act was passed.
- Subsection (2) defines "the moratorium period" for this purpose. This period begins on the day on which this Act was passed and ends either within six months beginning with that day if the matter is not referred to arbitration (unless this period is extended); or when the arbitration concludes, if the matter is referred to arbitration.
- Subsection (3) provides that the six-month moratorium period where a matter is not referred to arbitration, can be extended by regulations made under section 24.
- Subsection (4) provides the circumstances when an arbitration is concluded for the purposes of subsection (2)(b). Arbitration is concluded when either the proceedings are abandoned or withdrawn with the agreement of both parties; or the time period for appealing the decision of the arbitrator expires after an arbitration award without an appeal being brought; or any appeal brought within that period is finally determined, abandoned or withdrawn.
- As set out in clause 14, an amount payable under an award is treated as rent payable under the tenancy. Therefore, if an arbitration award is made with which the tenant does not comply, remedies may be exercised in the same way as with other unpaid rent under the lease.
- The use of "arbitration" in this section means arbitration provided for by Part 2 of the Act.
Section 24: Alteration of moratorium period
- This section sets out how the moratorium period under section 24(2) may be extended.
- Subsection (2) provides that for English business tenancies, extending the period for making references to arbitration (under section 9) would automatically extend the moratorium period.
- For Welsh business tenancies an extension of the moratorium period would need to be made by regulations and would require the consent of Welsh Ministers in respect of devolved matters (under subsection 6).
- Under subsection 4, the power to extend the moratorium period can only be exercised if the period for making references to arbitration is extended in respect of Welsh business tenancies by virtue of section 9(3)(b) or (c), and the moratorium period for Welsh business tenancies must be the same length as the extended period for making references to arbitration.
- Subsection (7) sets out that regulations made under subsection (4) are subject to the negative resolution procedure.
Section 25: Temporary restriction on initiating certain insolvency arrangements
- This section puts in place restrictions on a landlord or tenant entering into certain insolvency arrangements, when a matter relating to protected rent debt has been referred to arbitration.
- Subsection (2) sets out which insolvency arrangements are restricted and states that these arrangements are restricted only so far as they relate to whole or part of the protected rent debt.
- From the appointment of the arbitrator until 12 months after an award under section 14 – which gives relief from payment or states that no relief from payment is to be given - no proposal for a CVA or an IVA, or application for a compromise or arrangement under Part 26 of 26A of the Companies Act 2006 can be made. If an award is made dismissing the reference to arbitration then this period runs to the day on which the award is made. If an award under section 14 is set aside on appeal, the period runs to the day on which the appeal decision is made. If the parties withdraw or abandon the arbitration proceedings, the period runs to the day that they do so.
- This applies to CVAs or restructurings under Part 26 or 26A of the Companies Act in respect of companies and limited liability partnerships.
Section 26: Temporary restriction on initiating arbitration proceedings
- This section prevents a tenant or landlord from unilaterally invoking arbitration proceedings in relation to a protected rent debt, other than arbitration under Part 2 of this Act, within the moratorium period. The parties can agree to use arbitration other than that under Part 2 of the Act.
- Subsection (2) states that "the moratorium period" has the same definition as given in section 23.
Section 27: Temporary restriction on winding-up petitions and petitions for bankruptcy orders
- This section introduces Schedule 3, which contains provisions relating to winding-up petitions and petitions for bankruptcy orders. In a similar way to the previous sections, the provisions in this Schedule restrict a landlord’s ability to use these measures during the moratorium period for the protected rent debt. Schedule 3 also addresses certain bankruptcy petitions presented and resulting orders made from 10 November 2021 until the commencement of the Act.
