Commercial Property: Extension of Protections
Tuesday 23rd June 2020
The Government has announced an extension to various measures affecting commercial leases. The measures, intended to protect tenants during the pandemic, are:
- A moratorium on forfeitures for non-payment of rent;
- A temporary ban on the use of statutory demands and winding up petitions; and
- Landlords will be unable to use the Commercial Rent Arrears Recovery (CRAR) process until rent has been unpaid for 90 days (now increased to 189 days).
The Government plans to extend these from 30 June 2020 to 30 September 2020. A landlord’s only real option to recover rent remains, in most instances, a court claim.
Code of Practice
In addition a new voluntary Code of Practice has been published. The Code features a number of principles including transparency and acting reasonably and responsibly. It also suggests potential arrangements between the parties such as rent deferrals, reductions in rent, or sharing rent for periods of inoccupation. The key points from The Code are:
- Parties are encouraged to seek ‘collaborative’ and ‘sustainable’ arrangements to create shared recovery plans;
- Tenants who can pay rent, should continue to do so, if not in full then in part;
- Landlords are encouraged to provide support to business where possible, particularly through flexible rental plans;
- Parties who cannot agree are encouraged to consider mediation; and
- It is anticipated that service charge and insurance will generally be paid in full.
Whilst voluntary, the Code of Practice might be something both landlords and tenants can refer to when trying to come to an agreement.
If you require assistance with this, or general queries regarding your property, then please contact a member of our property disputes team below.