By Lisa Stratford at Irwin Mitchell
Now that businesses are reopening (and, soon, pubs and restaurants), landlords will want to ensure they collect as much of the June quarter’s rent as possible. However, tenants have in many cases received no income at all for the past 12 weeks.
We have seen a large number of enquiries, from both landlords and tenants, asking for help agreeing or requesting a rent deferment / concession for the June quarter; we have also received instructions from a number of landlords who want to recover rent arrears. Some of those landlords wish to recover rents where premises have remained open for business to some extent throughout the Covid-19 lockdown, such as supermarkets. In those circumstances, what can landlords do, given reports that some institutional landlords received less than a third of their expected March quarter rent?
The Government’s new Code of Practice for the commercial property sector requires parties to work together during this period. Landlords are unable to forfeit leases for non-payment of rent, and arrears of pure rent must equate to 189 days’ rent before CRAR can be used. However, tenants are still contractually obliged to pay their rent, together with any other sums due under the lease. Indeed, the Code encourages tenants to pay their rent where they are able to do so – though given the landlord’s limited remedies at the moment, the effect of this encouragement may be minimal.
It seems likely that the June quarter day will be a source of further disputes between landlords and tenants, as they try to find a way forward.
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The UK government has extended measures to prevent struggling companies from eviction over the summer. The extension, until the end of September, comes alongside further support to help local businesses plan for economic recovery following the coronavirus pandemic. A new code of practice has been developed with leaders from the retail, hospitality and property sectors to provide clarity for businesses when discussing rental payments and to encourage best practice so that all parties are supported.