No fireworks but CRCA effective

When the Commercial Rent (Coronavirus) Act (CRCA) 2022 came into force, it was hailed as a solution to the slew of commercial rent arrears issues brought about by the pandemic. One year since the act’s introduction, its use appears underwhelming on paper. However, this does not tell the whole story.

Designed to support landlords and tenants, the act aimed to cover rent arrears accrued while businesses were forced by law to close during the pandemic. During a six-month window, which ended on 23 September 2022, landlords were prevented from using certain remedies to pursue those rent arrears. Instead, either party could refer a dispute over the arrears to a statutory arbitration scheme.

However, despite much anticipation from practitioners, a flood of awards under the act never transpired. Falcon Chambers Arbitration, which was well positioned to be the first choice of many who might want to make a referral, published fewer than 20 awards, which were a combination of preliminary and final awards so resulted in fewer still distinct cases. The Chartered Institute of Arbitrators published just two awards.

With those numbers, some might view the act as a damp squib. However, fireworks are not necessarily the makings of a success story.

The act was strictly time-limited and there were undoubtedly a number of tenants who simply failed to make an application in time. However, in many cases, the very existence of the act, and concerns about what awards might be made under it, inadvertently encouraged landlords and tenants to negotiate and resolve matters outside the act. In that regard, the act can be viewed as a success.

For some, the act came too late. For others, it introduced the necessary breathing space to enable businesses to get back on their feet. Perhaps, ultimately, its success should be judged not on the number of awards made, but on the unknown – but undoubtedly large – number of resolutions it inspired.

This article first appeared in Property Week on 12 April 2023.