The government announced on Friday that it is working with certain businesses and trade associations to produce a code of practice to support high street businesses through coronavirus. The aim is to publish the code before the next quarter on 24 June 2020. Although this is intended to be a temporary measure, the announcement makes it clear that the code could be made mandatory if necessary.
According to the announcement, the code will seek to encourage fair and transparent discussions between landlords and tenants over rental payments during the current pandemic and offer guidance on rent arrears payments, as well as concerning the treatment of sub-tenants.
Yet again, the government's stated aim is to encourage parties to work together to protect viable businesses and help to ensure a swift recovery from the current crisis, including by ensuring that "no one part of the chain shoulders the full burden of payment". However, landlords and tenants will be keen to see the details of these measures and the extent to which the code offers any meaningful support for their respective interests. It is likely to be difficult to achieve a balance which works for both parties, given the variety of businesses and individuals involved in the commercial property sector.
Reports in April indicated that only 48.2% of the March quarter's rents were received by the major listed retail landlords (see https://www.egi.co.uk/news/hidden-dangers-of-government-raid-on-landlords-revealed/ ) and receipts in June are expected to be worse. Whilst the government has introduced various measures to provide a breathing space to tenants, many landlords are concerned about their own financial position and the fact that some major retail tenants have still paid nothing towards their March rents. However, according to Friday's announcement, all main commercial lenders will be contacting their major commercial landlord borrowers during the upcoming weeks to provide support where appropriate.
Those currently on the working group for the proposed new code are British Chambers of Commerce, British Property Federation, British Retail Consortium, Commercial Real Estate Finance Council, Revo, RICS and UK Hospitality.
{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.
Originally published June 1, 2020.
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