Update – extended protection to commercial tenants

Update – extended protection to commercial tenants and the Code of Practice for commercial property relationships during the COVID-19 pandemic

The Government has announced that it is extending the periods of protection to commercial tenants;

•  from forfeiture under the Coronavirus Act 2020, to prevent any business lease being terminated as a result of the tenant’s failure to pay rent from 30 June 2020 to 30 September 2020, so covering the next quarter period,
• from Landlords operating Commercial Rent Arrears Recovery procedures unless the tenant is 189 days in rent arrears
• from insolvency procedures, to ban the operation of statutory demands and winding up petitions where the tenant cannot pay its debts due to coronavirus from 30 June 2020 to 30 September 2020.

Beyond this, the Government has introduced the Code of Practice for commercial property relationships during the COVID-19 pandemic, which has been endorsed by leading representative bodies and organisations of both landlords and tenants including the British Chamber of Commerce, British Property Foundation, RICS, Revo, Federation of Small Businesses, Property Owners Forum.

The Code of Practice sets out the principals to guide landlord and tenant relationships in this crisis, of transparency and collaboration, mutual help and support, operating responsibly and reasonably, and encouraging negotiation. The Code sets out what is expected of each side in the relationship for the proper running of commerce, that landlords and tenants need to work together to secure agreements that best meet their needs.

The Code is not binding and is voluntary, and reflects best practice, largely setting out the parameters under which a great deal of negotiation between landlords and tenants has taken place. However, there is nothing to address unreasonable behaviour on either side, only to encourage collaboration and proper negotiation.

The Code of Practice is a signpost that the protection periods above will not be extended indefinitely, indeed maybe not beyond 30 September 2020, and, in the absence of further financial support to businesses, the Government is now leaving it to Landlords and Tenants to reach compromises and play fair.”

If you need to explore these issues in further detail, please contact Nigel Maguire on nigel.maguire@ashtonslegal.co.uk or call 07984 401319.

This information is correct at 9.30am on 24 June 2020.