The recent pandemic has placed a great deal of strain on all types of businesses and organisations. The UK Government has stepped in on a number of occasions to help ease the financial strain facing the country and one such measure has been the moratorium on forfeiture of commercial leases. This has meant that landlords of commercial premises cannot reclaim possession of their properties on the basis of unpaid rent by their tenants.
Additional relaxation measures have been made to include a landlord’s prohibition on using the Commercial Rent Arrears Recovery scheme (“CRAR”), the banning of statutory demands and winding up petitions giving tenant businesses some security in respect of their occupation of these commercial premises.
Each of these measures has since been extended until 30 September 2020 but this support cannot last forever. As a result a new Code of Practice for commercial property relationships during the COVID-19 pandemic (“the Code”) has been published in order to bridge the gap between the two parties. The Code is voluntary but if followed it aims to reinforce good relationships between landlords and tenants and enable businesses to continue to operate through a period of recovery.
The key principles of this Code include transparency and collaboration, acting reasonably and responsibly and taking a unified approach to reach an agreement in respect of a tenants payment obligations in a Lease. Whether this Code will have any significant impact on the future of the commercial property market is a question that remains unanswered but if it can help reduce the current level of inequality between a commercial landlord and its tenant then the Code may just have done what it set out to do.
For more information on the above or to speak to a member of the Commercial Property team, contact Commercialpropertydepartment@woodfines.co.uk