- The UK government will extend measures to prevent high street
businesses facing eviction over summer
- New code provides support to shops and local firms planning
their future recovery with their landlord
- Industry leaders back code and welcome measures to support
affected businesses
The UK government has extended measures to prevent struggling
companies from eviction over the summer.
The extension, until the end of September, comes alongside
further support to help local businesses plan for economic
recovery following the coronavirus pandemic.
A new code of
practice has been developed with leaders from the
retail, hospitality and property sectors to provide clarity for
businesses when discussing rental payments and to encourage best
practice so that all parties are supported.
These interventions are in addition to the comprehensive
financial package provided by the UK government to businesses
during this difficult time and is in recognition of the strain
that the sector is currently under.
The code is voluntary for businesses and is relevant to 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 suspension of the forfeiture of evictions will come as a
relief in particular to pubs, cafes and restaurants, after the
hospitality sector called upon the government for action in this
area.
Communities Secretary, Rt Hon MP 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.
Business Secretary said:
From clothes stores to our local book shop, we want as many
high street businesses as possible to emerge from the pandemic,
in the best position to bounce back.
During this particularly challenging time for businesses, our
retail stores are safely welcoming shoppers back and taking the
necessary steps to drive economic recovery.
By putting a stop to unreasonable evictions, these measures
will protect jobs and provide further flexibility to our high
street businesses that were trading successfully before the
COVID-19 emergency, so they can focus on continuing to deliver
for their customers and communities.
Across the UK, the code will encourage 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.
The UK government has confirmed the following changes to the
existing package of measures for the commercial sector:
- We 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, meaning no business will
be forced out of their premises if they a miss a payment in the
next three months.
- We 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 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 also confirmed its
members’ continued support for commercial landlord customers
including amendments to facilities and capital payment holidays.
The UK government’s financial package of measures to support
businesses during the economic emergency includes:
- A Coronavirus Job Retention Scheme where small and large
employers can apply for a government grant of 80% of
workers’ salaries up to £2,500 a month. The scheme will be
backdated to 1 March 2020 and available for at least 3 months,
with first grants to be paid within weeks.
- Deferral of the next quarter of VAT payments for firms, until
the end of June - representing a £30 billion injection into the
economy.
- £330 billion worth of government backed and guaranteed loans
to support businesses.
- A Bounce Back Loans scheme, providing loans of up to £50,000
to benefit small businesses with a 100% government-backed
guarantee for lenders. These loans will be interest free for the
first 12 months and businesses can apply online through a short
and simple form.
- A Self-Employed Income Support Scheme to help eligible
freelance workers receive up to £2,500 per month in grants for at
least 3 months.
View the code of practice.
It was developed and coordinated by the UK government alongside a
working group of the following, who have all endorsed the code;
British Chambers of Commerce, British Property Federation,
British Retail Consortium, the Commercial Real Estate Finance
Council, Revo, the Royal Institution of Chartered Surveyors and
UKHospitality.
The working group was also supported by Trowers & Hamlins LLP
who provided expert legal advice during the code’s development.
To date, a number of other organisations have also endorsed the
code including; Agricultural Law Association; Association of
Convenience Stores; British Beer and Pubs Association, British
Independent Retailers Association, Central Association of
Agricultural Valuers, Country Land Association, Federation of
Small Businesses, Property Owners Forum, Scottish Property
Federation, Tenant Farmers Association and Tenant Farmers
Association Cymru, UKActive and UK Major Ports Group.
Jane Gratton, Head of People Policy, British Chambers of Commerce
said:
The pandemic has created severe cashflow problems for many
SMEs, who will need time to rebuild and recover. This code
will help landlords and tenants to work together constructively
to find solutions that keep businesses open and people in work.
Melanie Leech, Chief Executive, British Property Federation said:
The majority of property owners and occupiers are already
working well together, creating shared solutions to mitigate
the impact of coronavirus on their businesses. The code of
practice published today builds on the many examples of good
practice and reinforces the importance of constructive
collaboration – not only over the next few months and once the
government’s temporary legislative interventions come to an end
later this year, but for the long term.
The success of landlords and tenants working together as
economic partners is vital to the UK’s recovery and to help
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.
Helen Dickinson, Chief Executive, British Retail Consortium said:
The ongoing pandemic presents an enormous threat to the
survival of thousands of retailers, and the millions of jobs
they support. The necessary closure of most shops during
lockdown has created a gaping hole in many retailers’ finances.
This has been exacerbated by continued rent demands on stores
around the country, even where most have been closed for
business. A solution is needed.
This code is a first step toward improving the dialogue between
retailers and their landlords. An extension to tenant
protections against aggressive behaviour from some landlords is
essential to underpin it, and we warmly welcome the
government’s commitment to this.
However, all parties should recognise that the code does not
provide a solution for those retailers who are simply unable to
pay what is being demanded, and we now look forward to
continuing our constructive dialogue with government and other
parts of the property sector to address these unpayable rents.
Without further action, both retailers and landlords remain in
a precarious situation that could lead to substantial numbers
of redundancies as soon as tenant protections expire.
Peter Cosmetatos, Chief Executive, Commercial Real Estate Finance
Council said:
Commercial real estate investment and finance markets are a
complex, interconnected ecosystem; the pandemic-related stress
affecting so many rent-paying businesses also threatens their
landlords, and their investors and their lenders, with
potential implications for economic recovery.
This code cannot magically plug revenue holes, but it sends a
strong signal that good faith engagement and financial
transparency are essential if commercial tenants and landlords
are to find their way through this crisis.
Vivienne King, Chief Executive, Revo said:
Revo is pleased to support the government code of practice,
which offers guidance to property owners and occupiers in
navigating temporary rent arrangements through the pandemic,
whilst underwriting the sanctity of existing contractual
terms.
There are many cases of owners and occupiers collaboration in
managing loss of income, which the code of practice reflects
and we will continue to support government in identifying the
potential measures to address this loss of income, which not
only impacts owners and occupiers, but the wider economy
including the savers and pensioners who depend upon it.
Paul Bagust, Global Property Standards Director, Royal
Institution of Chartered Surveyors said:
We are pleased to have helped government in shaping this code
which will increase constructive engagement and transparency
between landlords and tenants at this challenging time. We
believe it will provide a basis for negotiated measures which
recognise the mutual importance and interdependence of
landlords and tenants in contributing to the economy.
Kate Nicholls, CEO, UKHospitality said:
The near-total wipeout of income from the hospitality sector
has left it unable to meet its rent obligations. This code goes
some way to bringing together landlord and tenant in the
pursuit of a negotiated solution to allow hospitality
businesses to move on and revert to the new normal, but this
must be recognised as a first step that needs to be built on by
all parties.
We remain of the view that further time and support is needed
to facilitate a recovery for the hospitality sector, that is at
the heart of our social lives and communities. The extension of
the moratorium on aggressive enforcement and forfeiture is a
welcome measure to allow this process to take place.
