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Covid Rent Arrears Arbitration

Covid Rent Arrears Arbitration

Disputes about rent arrears accumulated as a result of the pandemic - may now be determined by arbitration. The Commercial Rent (Coronavirus) Act 2022 sets out a binding arbitration procedure for the resolution of rental disputes where landlords and tenants of commercial properties have been unable to resolve the matter themselves.

RICS has been selected by government to be an Approved Arbitration Body, authorising us to appoint chartered surveyors and other professionals to act as arbitrators under this legislation.

RICS has developed a tailored Covid Rent Arrears Arbitration service, drawing on a specialist panel of commercial arbitrators with decades of experience working with commercial landlords and tenants. These arbitrators have expertise in assessing the viability and profitability of tenant businesses for the purpose of determining their rents. Their immense experience as commercial arbitrators, and the ability to deal with accounting records as evidence, lie at the heart of the new legislation. We believe RICS arbitrators are ideally equipped to decide the questions of business viability and rent affordability, as required by the new law.

RICS have developed the RICS Covid Rent Arrears Arbitration Guide and suite of templates below, which support users through the Arbitration Process.

NOTE: This legislation applies only to England and Wales.

How does Covid Rent Arrears Arbitration work?

Either the landlord or the tenant can take the other to arbitration without their agreement. They must each submit a proposal and evidence about how the protected rent debt should be dealt with – whether any should be written off or instalments allowed – and the arbitrator must implement the proposal that best maintains the viability of the tenant business without impacting on the solvency of the landlord. The other proposal is discounted - thus parties need to be reasonable in what they suggest.

Benefits of RICS Arbitration

✔ RICS arbitrators are appointed because of their extensive experience and understanding of the commercial property sector and landlord tenant relationship.

✔ Arbitrators owe a legal duty to both parties to act fairly and impartially

✔ RICS offers different levels of fees to assist small and SME parties, and to allow for comprehensive evidence and argument in big cases

✔ Parties receive a final and binding decision on how they are to proceed

Fees

RICS Arbitration Procedure All the processes listed here involve the appointment of a single arbitrator only. Parties seeking a larger tribunal should approach RICS direct

Amount of protected

Arbitrator’s fee
(excluding VAT)
(Any arbitrator’s
expenses will be
calculated separately)

RICS
administration
fee
(excluding VAT)

Arbitration A

Fixed fee and limited documentation

<£20,000

£750

£100

Arbitration B

Fixed fee and limited documentation

<£50,000

£1,500

£250

Arbitration C

Reduced fee and limited documentation

Outside M25
<£350,000

 Inside M25
<£500,000

Hourly fee up to £300 per hour and anticipated maximum total fee agreed with the arbitrator prior to the arbitration taking place.

£450

Arbitration D

Fees determined prior to arbitration taking place and documentation as directed by the arbitrator

Outside M25
>£350,000
Inside M25
>£500,000
OR
All other cases where the landlord and tenant have not agreed to use procedure A, B or C

Hourly fee up to £400 per hour and anticipated maximum total fee agreed with the arbitrator prior to the arbitration taking place.

£450

 

Apply

To apply for an RICS arbitrator under the Commercial Rents (Coronavirus) Act 2022, complete and submit the CRAA3 Reference to Arbitration below.

Please note: RICS can only process the Reference to Arbitration once the required preliminary time periods for the Notice of Intention to Arbitrate CRAA1 and Response to it CRAA2,  have passed.

The templates below are available to download free of charge.

CRAA1 – Notice of Intention to Arbitrate

CRAA2 – Response to the Notice of Intention to Arbitrate

CRAA3 – Reference to Arbitration

CRAA4 – Response to the Reference to Arbitration

CRAA5 – Revised formal Proposal and Accompanying Evidence

CRAA6 – Application for Extension of Formal Proposal Time Periods

CRAA7 – Request for Oral Hearing

CRAA8 – Application for Extension of Oral Hearing Request Time Periods

CRAA9 – Request for the Removal of an Arbitrator