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.
Communities Secretary, Rt Hon MP said:
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.
The Chancellor of the Exchequer, MP said:
The government is committed to supporting the
commercial rental sector as it deals with the
disruption caused by the coronavirus outbreak.
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.
Helen Dickinson, Chief Executive of the British Retail
Consortium said:
The Coronavirus pandemic has accelerated longer-term
trends in retail property. Rent demands are
increasingly out of kilter with current property values
and many retailers are being forced to pay rent on
closed stores.
We welcome the government’s Code as a positive first
step and are working constructively with it and
landlords to ensure that otherwise viable businesses
are not forced into administration. However, all sides
must be prepared to do more if necessary, given that
the commercial lettings market is in need of wider
reform.
Melanie Leech, Chief Executive, British Property
Federation said:
Coronavirus is placing an unprecedented strain on
property owners and the businesses who occupy their
buildings, and we need a united approach in
response.
The majority of property owners and tenants are already
working well together, effectively engaging and
agreeing sustainable plans, and we welcome the
opportunity to work with government and others to
codify this good practice.
Fair collaboration among lenders, property owners and
tenants is vital to the UK’s recovery and it will
ensure that viable businesses in distress as a result
of coronavirus are supported, to protect both people’s
jobs and the local authorities, savers and pensioners
who own the majority of our town centres.
Kate Nicholls, CEO, UKHospitality said:
A code of conduct is a significant step in
unlocking the current impasse in the commercial
property market. 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.
Today’s 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.
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.
Further detail on support for commercial landlords and
tenants can be found on the UK Finance
website.
Membership of the working group will currently include
- British Chambers of Commerce
- British Property Federation
- British Retail Consortium
- Commercial Real Estate Finance Council
- Revo
- Royal Institution of Chartered Surveyors
- UKHospitality
