The government is set to introduce a new code of practice designed, which it hopes will provide clarity and reassurance over rent payments in the commercial rental sector.
Very little information has been provided by the government as to what stakeholders in the sector should expect from the new code – however it is understood that:
- The code is being developed by a “working group” of those in the commercial rental sector with a view to developing a set of principles which encourages “fair and transparent” discussions between Landlords and Tenants over rental payments during the Coronavirus pandemic
- The government identifies that the code will provide “clarity to landlords and tenants who are both facing equal pressures on their finances so they are all able to stabilise their finances and bounce back”
- At least in the first instance the code will not be mandatory – but the government states that it will “explore options” to make it mandatory if necessary
It is likely the publication of the code is linked to the government’s announcement of the easing of the lockdown allowing non-essential shops to open from 15 June.
Given that many tenants occupying so called “non-essential shops” have been prevented from trading for an entire quarter – clarity around how their obligation to pay rent might or should be viewed as the June quarter looms is likely to be well received.
Likewise, commercial landlords who have had their “normal” avenues for seeking payment of rents curtailed by the government in response to Coronavirus will no doubt welcome clarity as to how their right to pursue rent might or should be viewed in relation to the upcoming June quarter date and beyond.
Whether, without statutory support, the Code of Practice can achieve this, only time will tell.
It is expected that the Government will publish the code before 24 June 2020 (i.e. the next quarter date).