- Transparency and collaboration
- A unified approach
- Government support
- Acting reasonably and responsibly
The Code does not change the underlying legal relationship or lease contracts between a landlord and tenant. It is voluntary and includes a number of options of new arrangements that could be agreed between the parties including:
- Rental variations to reduce ongoing payments
- Full or partial rent free periods for a set number of payment periods
- Removal of a tenant break right
- Extending the lease term
- A partial surrender of the lease term.
The current restrictions on landlord remedies to recover rent arrears or possession of business property are due to expire on 30 June 2021.
Tenants remain liable for any rent arrears accumulated during the period of restrictions. The terms of a lease will determine whether a tenant can refuse to pay rent or choose to terminate the lease early. The lease may contain a break clause, force majeure clause or provision on turnover rent that allow it to do so, however most commercial leases will ensure rent is payable without deduction or set off. It is therefore generally unlikely that a tenant will be able to withhold payment for Covid related reasons.
It is in both the landlord and tenant’s interests that the business survives these challenging times and the Code of Practice helps to negotiate solutions between the parties and encourages them to work together.
The Government is inviting businesses to make their views known on how the withdrawal of the current restrictions should be managed. Please follow the link to the Commercial Rents and Covid-19 Call for Evidence. The Government is particularly interested to hear the views of small to medium sized businesses including small commercial landlords, independent businesses and sole traders with leased premises.
The Government would welcome responses by 23:59 on 4 May 2021.
If you have any queries either as a business landlord or a business tenant in relation to your lease arrangements, please contact our team on 01926 491181.