We have written previously about the arbitration scheme and how it will work, and in recent months we have begun to see some use of the arbitration process, albeit there have not been nearly as many referrals as initially expected.
Given that the scheme will expire on 23 September 2022 (unless extended) tenants may be forgiven for thinking they still have time to make a referral to arbitration. However, that may not be the case. Tenants who have not yet taken any steps to engage with the arbitration process, even though the 23 September 2022 deadline is over two weeks away, risk not being able to make a referral.
Although under the Act parties have until 23 September 2022 to make a referral, before this the Act provides that the referring party must have notified the other party of their intention to do so.
The notification process works as follows:
- Before making a reference to arbitration, the landlord or tenant must notify the other party of their intention to do so, and the respondent may, within 14 days of receipt of the notification, submit a response.
- No reference to arbitration can be made before either i) 14 days after any response is received or ii) if no response is received, 28 days beginning on the day on which the original notification was served.
The result is that if a tenant has not yet notified a landlord that it intends to refer the matter to arbitration, the landlord can simply not submit a response. As the tenant cannot refer the matter to arbitration for 28 days, by which time the deadline of 23 September 2022 will have passed. The tenant will be out of time.
What does this mean for landlords?
If landlords receive a notification from a tenant that they intend to refer the matter to arbitration, they can choose not to respond and just wait for the 23 September deadline to pass. Assuming the government does not extend this deadline, a landlord will then be entitled to exercise any of its usual remedies to recover the protected rent debts from its tenant.
What does this mean for tenants?
Well advised tenants should have already served their notices to refer the matter of any outstanding protected rent debts to arbitration. However, for those that have not, they face the likely outcome of having to pay any outstanding protected rent debts in full.
Any tenants who have not yet served such a notification on their landlord may decide to serve a notification anyway, in the hope that they receive a response from their landlord more than 14 days before 23 September; however, any well advised landlord will not respond, leaving the tenant out of time.
Is there any hope for tenants of an extension?
There has been no suggestion from the government that the 23 September deadline will be extended. Take up of the scheme has been very limited and given spiralling inflation, rising interest rates and the energy crisis, it seems unlikely that an extension to the 23 September deadline will be top of our new PM’s agenda.
Authored by Benjamin Willis.