MHCLG announcements for commercial property: code of practice and tenant protections

By June 22, 2020NEWS

Code of Practice

The code of practice has been developed by government and leading representative bodies in recognition of the financial strain the commercial property sector is currently under a result of Covid-19.

The code will help guide and facilitate discussions during the moratorium over rent arrears and future payments between landlords and tenants and ensure best practice across the sector.

The code is voluntary for businesses and is relevant 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.

It will apply across the UK and 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 code was developed and coordinated by the UK Government alongside a working group of the following, all of whom have endorsed the code;

  • British Chambers of Commerce
  • British Property Federation
  • British Retail Consortium
  • Commercial Real Estate Finance Council
  • Revo
  • Royal Institution of Chartered Surveyors
  • UKHospitality.

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
  • UK Major Ports Group

The success of the code will depend upon the number of organisations willing to support it. As such, the steering group welcomes further endorsements. If you would consider doing so, please get in touch.

Moratorium on commercial forfeitures and other tenant protection measures

Today government also announced the extension of the moratorium on commercial lease forfeitures, as well as extensions to other measures protecting tenants, for a further three months. These measures will provide businesses with the security they need as they begin to reopen.

The announcement confirms that in order to protect tenant businesses during this period;

  • 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.

The government does not see the publication of the code or the extension of tenant protections as a single solution for the sector. There will be circumstances where landlords and tenants are still unable to come to an agreement, threatening the survival of otherwise viable businesses.

As such, the government will continue to monitor the financial health of the sector over the coming weeks and we recognise that further intervention may be necessary. We welcome further engagement with your organisations during this period, so we can ensure every part of the sector is appropriately supported.

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