We have previously posted as to the effect of the Coronavirus Act 2020 on commercial property and in particular the position of landlords and tenants during these uncertain times.
The Act came into force on the 25th of March 2020 and at that stage the legislation introduced measures which prevented a landlord from terminating business tenancies by forfeiture of the lease due to non-payment of rent for the period up to the 30th of June 2020.
The Government has recently announced that this moratorium period on forfeiture of business tenancies is now to be extended until the 30th of September 2020 and possibly there may be further extensions after this date.
The measure introduced by the Government is further assistance for tenants in these difficult times and prevents tenants being evicted from their commercial property due to non-payment of rent.
Landlords however still have their own problems in that rent they usually receive is not being paid or severely reduced. Landlords have their own financial commitments to their lenders and their own bills to pay.
This is recognised within the provisions of a Code of Practice which the Government have also now just introduced, intended to provide more specific guidelines to control negotiations between landlord and tenant is regard to existing leases. This Code is voluntary and encourages landlords and tenants to work together to their mutual benefit.
The Code is voluntary and does not intend to alter existing legal arrangements and most of the guidelines confirm an approach which landlords and tenants are probably already adopting under the current arrangements to assist tenants. The Code does specifically encourage tenants to pay their rent if they are in a position to do so or to at least pay something towards the rent even if they cannot pay the whole amount. The Code suggests that tenant should prioritise payment of service charge and insurance premiums so far as possible and landlords are encouraged to review service charge demands to reflect any reduced use of the property by the tenant or any change in services provided by the landlord.
The Code encourages the parties to be transparent with each other and to provide supporting financial evidence to justify their respective positions in the light of a request from a tenant to reduce their rent commitments.
The Government has said that it will monitor the situation and assess how the Code might be helping the situation and it is possible that further measures may be put in place to encourage parties to work together on a plan for a “sustainable future“.