The government published a new code of practice on 19 June, designed to help Covid-19-affected businesses and landlords work together on rent payment issues.
The code of practice is a bid to support businesses in distress due to Covid-19 restrictions, helping landlords and commercial tenants find solutions for affordable rental agreements. If you’re struggling to pay the rent, having a conversation with your landlord using the code as a guide could give you both a clearer plan of action.
The code is voluntary, however, and written as a guide to best practice. It can’t override any legal terms you’ve agreed with your landlord.
The government has published the code as a new, voluntary way for landlords and businesses to talk through rent issues and negotiate affordable rent solutions and agreements.
It emphasises that landlords and their commercial tenants need to work together to protect the business from failing due to Covid-19, and the code is a way of structuring conversations around rent.
The code has been developed by the government and leaders in the sector, including the British Retail Consortium (BRC), British Chambers of Commerce (BCC), British Property Federation (BPF) and Commercial Real Estate Finance Council Europe (CREFC).
It’s also been endorsed by the Agricultural Law Association (ALA), British Beer and Pubs Association (BBPA), Federation of Small Businesses (FSB) and Property Owners Forum, among others.
It’s written for commercial leases across all sectors, but will probably be most useful for retail, hospitality and leisure businesses.
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Before we get into the detail, the code repeats the government’s message that if you can afford to pay your rent, you should. If you can’t, you should pay what you can, and landlords should provide you with support wherever possible.
This is what the code is based on. They should shape any discussions you have with your landlord:
You might have already been acting on principles like these. If you were and you still can’t reach an agreement with your landlord, the code advises looking into third party mediation – but only if it makes financial sense.
If you’re asking for a concession from your landlord, you need to be clear on why it’s needed. This means:
In turn, the code states that your landlord should:
The code encourages landlords to think about their own financial position, as well as yours, and how certain issues and restrictions may have caused real harm to your business. These include:
They should also consider how you’ve used and government support, and your track record as their tenant.
The code sets out a list of options you and your landlord could consider to make life more affordable in light of Covid-19. These include:
Finally, the code looks at essential insurance and service charges. It acknowledges that these should continue being paid in order to keep the building safe and fit for purpose. However, it advises service charges to be:
Any agreement you do reach for service charges will need to take into account the Royal Institution of Chartered Surveyors (RICS) Professional Statement Service Charges in Commercial Property, 1st edition.
It should also factor in all RICS guidance in relation to service charges and Covid-19.
No, the code isn’t legally binding. It’s written as a voluntary document, and designed to encourage commercial landlords and tenants to work together.
However, if your discussions have stalled or you don’t know where to start, the code can also provide a useful structure to get the conversation moving.
Have you and your landlord discussed alternative rent arrangements, or the code of practice? What do you think of it? Tell us in the comments.
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13 December 2013 • 2-minute read
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