The government has announced that a new code of practice is to be published for High Street businesses and their landlords to help provide clarity and reassurance over rent payments. A new working group has been setup with leading businesses and trade associations to develop the new code of practice.
The government has said that the new code will encourage fair and transparent discussions between landlords and tenants over rental payments during the Coronavirus pandemic and guidance on rent arrear payments and treatment of sub-letter and suppliers. This will enable collaboration and cooperation within the sector and help ensure no one part of the chain carries the full burden of payment. The new code will be temporary and the government will be able to explore options to make it mandatory if necessary.
The new code will build on other measures for the sector already announced including a suspension on commercial landlord evictions until at least the end of June.
There are also measures temporarily banning the use of statutory demands and winding up petitions until 30 June 2020 and more breathing space for tenants by preventing landlords using Commercial Rent Arrears Recovery unless they are owed 90 days of unpaid rent.
The government is working with leading businesses and trade associations to publish a code of practice to support high street businesses through coronavirus
- It will help guide and encourage all parties to work together to protect viable businesses and ensure a swift recovery
- UK Finance confirms lenders continue to show flexibility to commercial borrowers
High street businesses and landlords are set to benefit from a new code of practice, which is in development to provide them with clarity and reassurance over rent payments.
A working group has been established by the government with the commercial rental sector to develop a code which encourages fair and transparent discussions between landlords and tenants over rental payments during the coronavirus pandemic and guidance on rent arrear payments and treatment of sub-letter and suppliers. This will enable collaboration and cooperation within the sector and help ensure no one part of the chain shoulders the full burden of payment.
The group will also seek to involve wider business input through its sector members to ensure a greater number are consulted and able to share their views.
We are developing a new code of practice, working alongside the industry’s leading bodies, to provide that clarity and reassurance to both commercial tenants and their landlords in recognition of the challenges they are facing as a result of coronavirus.
We expect all parties to come to the table so our high streets and town centres are in the best possible position to come back from these challenges
We are giving clarity to landlords and tenants who are both facing equal pressures on their finances so they are all able to stabilise their finances and bounce back.
Communities Secretary, Rt Hon Robert Jenrick MP
Agreeing that a code of conduct is a significant step in unlocking the current stalemate in the commercial property market, Kate Nicholls, CEO, UKHospitality commented
Now is the time for all stakeholders to come to the table and broker an agreement.
Hospitality businesses have seen revenues all but dry up since March, so government intervention is desperately needed – with a sustainable financial plan in place.
Our sector needs enforceable measures in place, so that the burden currently borne by operators is shared more equitably. This code could be pivotal in protecting communities and high streets from mass closures and job losses.
The code will be temporary in nature and the government will explore options to make it mandatory if necessary. We will engage with Devolved Administrations to ensure the code applies across the UK and are working to publish it prior to the next quarterly rent payment date.
The announcement comes as UK Finance confirms its members’ continued support for commercial landlord customers including amendments to facilities and capital payment holidays.
Ahead of the June payment day, all the main commercial lenders will be in contact with their major commercial landlord borrowers to identify concerns they have and provide support where appropriate.
Kate Nicholls, CEO, UKHospitality
The government’s package of measures for the commercial sector also includes;
- Measures, including in the Coronavirus Act, to prevent any business being forced out of their premises if they miss a payment until 30 June. The government has an option to extend this if needed.
- Temporarily banning the use of statutory demands (between 1 March 2020 and 30 June 2020) and winding up petitions presented from Monday 27 April, through to 30 June, where a company cannot pay its bills due to coronavirus. This is included in the government’s Corporate Insolvency and Governance Bill.
- Laying secondary legislation to provide tenants with more breathing space to pay rent by preventing landlords using Commercial Rent Arrears Recovery unless they are owed 90 days of unpaid rent.
These measures do not account to a rental holiday but allows breathing space for tenants facing significantly reduced income due to the closures measures and current economic circumstances. Rent is still owed, and those tenants who are able to pay some or all of their rent are expected to do so.
The government is also reminding the sector of the existing measures in place that affect the sector’s landlords, this includes:
- Flexibility for Real Estate Investment Trusts when distributing income
- A Practice Direction issued by the Master of Rolls with the agreement of the- Lord Chancellors which stays possession proceedings for 90 days from 27 March. This applies to commercial premises.
The Chancellor of the Exchequer, Rishi Sunak MP confirmed the Governments commitment to supporting the commercial rental sector as it deals with the disruption caused by the coronavirus outbreak.[1]
We continue to work with lenders to ensure flexible support is provided to commercial landlords, including payment holidays and restructuring facilities, and it is right that where landlords receive support, they extend this to their tenants.
The Chancellor of the Exchequer, Rishi Sunak MP
[1] reproduced from informanagment