To Let property agency sign posted outside English terraced houses in Poplar, East London

The government published a voluntary code of practice designed to help businesses which are unable to pay the rent due to the coronavirus pandemic.

“The Code of Practice for commercial property relationships during the Covid-19 pandemic” encourages landlords and tenants to work together to prevent struggling companies from facing eviction and to help them plan their future recovery. The code is voluntary and does not change the legal relationship between landlord and tenant.

The government says that tenants who can should pay their rent in full and advises others to pay what they can.  Landlords are encouraged to provide support to businesses if they are not able to pay their rent.

The code is not exhaustive, but suggests a number of measures that landlords and tenants could consider to renegotiate lease terms during the pandemic.  These include agreeing rent deferrals, moving from quarterly to monthly rent payments or negotiating rent concessions in return for new terms, such as the removal of a tenant’s break right.

The code also suggests that landlords could consider rents based on business turnover.  This would protect businesses which are struggling with low trading volumes due to the pandemic, while allowing landlords to benefit from higher rental income when business volumes and turnover recover.

Signatories to the code include the British Chambers of Commerce, British Property Federation, British Retail Consortium, Commercial Real Estate Finance Council Europe, Revo, Royal Institution for Chartered Surveyors and UK Hospitality.

The code sits alongside other initiatives introduced by the government to protect businesses during the pandemic, including a moratorium on business evictions until the end of September 2020.

Communities Secretary, Rt Hon Robert Jenrick MP said at its launch: “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 was welcomed by stakeholders. Jane Gratton, Head of People Policy, British

Chambers of Commerce said: “The pandemic has created severe cash flow 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.”

James Burgoyne, Director – Claims & Technical, Brunel Professions said: “Many professional firms have been severely affected by the pandemic and face high fixed costs including salaries and rent.  The code is in place until 24 June 2021 so property managers not only need to understand it but also its proper place as non-mandatory guidance.

The code and government’s press release have been published on its website.  Commentary about the proposals has been published by Wright Hassall, CMS Law Now and Collyer Bristow.

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