Over the last 3 months we at Parfitt Cresswell have been advising landlords and tenants on the different ways in which they can help each other deal with the shocks caused by the pandemic. Our advice has been that, to help tenant’s businesses survive, landlords and tenants should work collaboratively to try and agree concessionary, temporary arrangements wherever possible which will be mutually beneficial.
The new “Code of Practice for commercial property relationships during the COVID-19 pandemic” (“the Code”) introduced by the Ministry of Housing, Communities and Local Government this month will build upon and support the ongoing negotiations that have been taking place over the last few months by providing a framework to these conversations. It will no doubt be welcomed by tenants, landlords and their lenders as the effects of the economic disruption caused by the coronavirus continues to be felt, particularly in the leisure, hospitality and retail sectors.
The aim of the Code is simple, it is to promote good practice between landlords and tenants and will ultimately assist with the recovery of the economy. Like other ‘best practice’ codes, compliance with the Code is not mandatory and depends on parties working together - “in good faith, reasonably and flexibly” in line with the following principles:
When trying to come to a new arrangement there are many options to consider and the Code offers some suggestions such as:
This list is not exhaustive, and every landlord and tenant relationship will be different and have different needs and objectives. We are able to help you negotiate an agreement that will work for you in your current circumstances.
The Code recognises that it doesn’t all have to be one sided and, in return for any of these concessions, a landlord can ask for something in return, for example, removal of a tenant’s break clause, a lease extension or adding a further rent review later in the term of the lease.
Any agreement that is reached should be properly documented and any variation to the rent payment should protect against forfeiture after the moratorium on forfeiture under the Coronavirus Act 2020 is lifted. We therefore recommend that both landlords and tenants act now, if they haven’t already done so, to try to reach an agreement acceptable to both parties and work together to facilitate the swift recovery of our economy.
If you would like to speak to one of our expert commercial property team call us today on 0800 999 4437 or email firstname.lastname@example.org quoting reference CPROP260620 to reserve your spot today.
We look forward assisting you with your legal needs.