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As retailers struggle to keep up with rent payments following the closure of businesses during the UK’s lockdown, a new code of practice could benefit the commercial sector.
The Government recently announced it was developing a code of practice with leading businesses and trade associations, in an effort to offer “clarity and reassurance” to both retailers and landlords when it comes to rent payment.
The new code aims to encourage fair and transparent discussions between landlords and tenants regarding payments during the pandemic, as well as guidance on rent arrear payments and treatment of sub-letter and suppliers.
Since lockdown began in March, landlords were banned from evicting commercial tenants that couldn’t pay rent, as retailers across the country shut shop. The following month, landlords were banned from issuing statutory demands or winding-up orders. The Government insisted the measures didn’t equate to a “rent holiday”, and the new code will give breathing space to tenants facing drastically reduced income owing to the current situation.
The new code of practice comes at a time when businesses on the high street are preparing to reopen amidst ongoing uncertainty around the economy. Communities secretary Robert Jenrick stated that the code would assist landlords and tenants in stabilising their finances and bouncing back, helping to place high streets and town centres in the best possible position following the challenges presented by coronavirus.
Speaking about the new code, Helen Dickinson, chief executive of the British Retail Consortium, said: “The Coronavirus pandemic has accelerated longer-term trends in retail property. Rent demands are increasingly out of kilter with current property values and many retailers are being forced to pay rent on closed stores.
“We welcome the Government’s code as a positive first step, and are working constructively with it and landlords to ensure that otherwise viable businesses are not forced into administration. However, all sides must be prepared to do more if necessary, given that the commercial lettings market is in need of wider reform.”
The code, which is said to be published prior to the next quarterly rent payment, will be temporary, though the Government has said it will explore options to make it mandatory if necessary.
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