Ministry issues code of practice for commercial property relationships during COVID-19
The Government has published a code of practice “to encourage commercial tenants and landlords to work together to protect viable businesses” during the coronavirus pandemic.
The Ministry of Housing, Communities and Local Government (MHCLG) also announced that measures to prevent struggling companies from eviction will be extended until the end of September.
Developed with leaders from the retail, hospitality and property sectors, the code of practice is intended to provide clarity for businesses when discussing rental payments and to encourage best practice so that all parties are supported, the MHCLG said.
The Ministry said: “The code is voluntary in nature and is relevant for all commercial leases held by businesses in any sector which have been impacted by the coronavirus pandemic.
“It encourages tenants to continue to pay their rent in full if they are in a position to do so and advises that others should pay what they can, whilst acknowledging that landlords should provide support to businesses if they too are able to do so.”
The code will apply across the UK and “encourages tenants and landlords to be transparent in their discussions and to act reasonably and responsibly whilst recognising the impact that coronavirus has had on businesses’ finances”.
Communities Secretary Robert Jenrick said: “As our high streets come to life and our town centres open for business, it is crucial that both landlords and tenants have clarity and reassurance as they seek to keep their finances stable and bounce back.
“That is why we are extending measures to protect those who are unable to pay rent from eviction so that businesses have the security they need to plan for their futures.
“And in recognition of the strain that the virus has had on our high streets, our new code, backed by leaders across the industry, will help unlock conversations on rent and future payments whilst ensuring best practice is displayed across the board as we confront the challenges of this pandemic.”
The code has been endorsed by a range of organisations include British Chambers of Commerce, the British Property Federation, the British Retail Consortium, the Royal Institution for Chartered Surveyors and UKHospitality.
Law firm Trowers & Hamlins provided legal advice during the code’s development.
The Government will lay a statutory instrument to amend the Coronavirus Act to extend the time period for suspension of the forfeiture of evictions from June 30 to September 30.
It will also lay secondary legislation to prevent landlords using Commercial Rent Arrears Recovery unless they are owed 189 days of unpaid rent. The time period for which this measure is in force will be extended from June 30 to September 30.
An amendment to the Corporate Insolvency and Governance Bill has also been tabled which will extend the temporary ban on the use of statutory demands and winding-up petitions where a company cannot pay its bills due to coronavirus until 30 September.
UK Finance has meanwhile confirmed its members’ continued support for commercial landlord customers including amendments to facilities and capital payment holidays.