19 Jun 2020
Struggling businesses could be allowed to use their deposits to pay rent, according to a new code of practice designed to help firms through the Coronavirus crisis.
The UK government has extended temporary measures to prevent companies from eviction until September.
The announcement was accompanied by a new code of practice 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.
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.
It suggests steps that landlords and tenants could agree. Many of these are set out in our earlier article accessed here.
In addition, the Code suggests:
Click here to read the code of practice in full.
Euan McSherry, Aberdein Considine’s Head of Dispute Resolution, comments: “The May Quarter Day in Scotland has resulted in many commercial landlords and tenants commence, and some conclude, the negotiations promoted by the Code.
"There are disputes, however. The Code carries not just the weight of Government support but also that of key stakeholders in the commercial property market such as the British Chambers of Commerce, the British Retail Consortium, the RICS and the Scottish Property Federation.
"The principles and suggested arrangements may assist to break down obstacles to resolutions for parties with disputes. It is encouraging that mediation is promoted as a means of conflict resolution.”
The suspension of the forfeiture of evictions (irritancy under Scots law) 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, Robert Jenrick 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."
The UK government has also confirmed the following changes to the existing package of measures for the commercial sector:
UK Finance has also confirmed its members’ continued support for commercial landlord customers including amendments to facilities and capital payment holidays.
Our Corporate & Business Advisory, Commercial Real Estate, Litigation, Insolvency and Employment Law teams remain fully operational and are helping businesses navigate the current crisis. Click here if you could like to speak to us.
Euan McSherry has achieved a Royal Institution of Chartered Surveyors (RICS) mediation accreditation and was the first Scottish lawyer to be listed on the Register of RICS Accredited Mediators. If any issues arising out of this article are of interest, please contact Euan at emcsherry@acandco.com or 07818 097172.