The UK government has issued an entirely voluntary code of practice to encourage landlords and tenants to hold fair and transparent discussions over rent payments due during the coronavirus crisis.
The government got the code out just ahead of the UK June quarter day on 24 June - which many landlords fear will see even less rent collected than in March.
Some landlords had hoped that the code would be given teeth, perhaps by linking its use in some way to tenants’ temporary entitlement to protection from eviction, but this has not happened. The government simultaneously announced a three-month extension of the moratorium on tenant evictions until the end of September.
Deian Rhys, a real estate partner at Simmons & Simmons, said: ‘The code encourages parties that haven’t already done so to come to the table, to be transparent and to work together to find sustainable solutions to protect viable businesses, but it doesn’t compel them to do that.’
While landlords say they have had many co-operative discussions with tenants, they have cited a number of retailers and hospitality businesses which they say have used the moratorium as an opportunity not to pay rent when they believe those tenants are in a position to pay. They include Travelodge, Matalan and Boots.
Travelodge is owned by the New York hedge funds Golden Tree Asset Management and Avenue Capital and the investment bank Goldman Sachs.
Richard Croft, M7 Real Estate’s executive chairman, told PropertyEU recently: ‘If the big companies that have the money...don’t pay, then we can’t pay our banks. If we can’t pay the banks then the basic economic system can’t survive.’
The government has recognised landlords predicament and been in dialogue with UK Finance, the body representing the banking and financing sector. UK Finance has confirmed its members’ support for commercial landlord customers saying it will support ‘amendments to facilities and capital payment holidays to help landlords and their tenants manage through the disruption.’
Rhys said that the code sets out some other helpful points, including the suggestion of mediation and the sorts of new arrangements that might be agreed.
