TENANTS AND LANDLORDS URGED TO WORK TOGETHER
Chartered surveyor Banks Long & Co has welcomed a new Government Code of Practice which is designed to encourage landlords and tenants to work together for a brighter future, following the easing of the Coronavirus lockdown.
The firm’s Associate Director Sarah Pettefar said the Government’s guidance is welcome and its endorsement by the RICS demonstrates the need for clear guidance for both landlords and tenants as the June quarter falls due.
“Although the Code is voluntary, its intention is to reinforce and promote good practice between both parties as they face pressure on their income because of the pandemic,” she said.
“The Code notes that “landlords and tenants must work together collaboratively, and many will want to find temporary, sustainable arrangements, outside of their leases to create a shared recovery plan.
“The implication is clear – the Government expects both parties to work together in a relationship of mutual support. That said, the Code clearly states that those tenants that can pay should do so, to enable landlords to provide greater assistance to those tenants in need.”
The Code relates to all businesses which have been impacted by Covid-19, but it is noted that it will apply most to those in the hospitality and leisure sectors, along with some parts of the retail sector.
The Code acknowledges that each relationship has its own nuances – so each response will be different. But it clearly states that both parties need to take into account the impact of any changes on the long-term viability of their businesses.”
There are four principles within the Code which landlords and tenants should follow:
· Transparency and collaboration
· A unified approach
· Government support
· Acting Reasonably and Responsibly
“There is an obligation for parties to act in good faith and for tenants seeking concessions to be clear with their landlords as to why these are needed,” said Sarah.
“The Code outlines a number of suggestions as to the form the concession could take, including a full or partial rent-free period, deferral of the whole or part of the rent, payment of rent monthly rather than quarterly, rental variations, drawing on rent deposits, reductions in rent, landlords waiving interest on unpaid rents, concessions being for a fixed period or the granting of a concession in return for a reversionary lease or the removal of an option to break.”
“Our landlords have already been in discussions with their tenants and the suggestions outlined by the Government are being utilised by many. However, although the lockdown restrictions have started to be lifted and a number of tenants are starting to open and trade, it is clear that - although some are experiencing high levels of demand - a full recovery is still some way hence. Careful management will be required to support both parties as we move into the transition period.
“We will continue to work closely with our clients and the tenants in our management portfolio over the course of the June quarter. Our Management Team provides our clients with a proactive management service and a collaborative approach to rent and service charge collection,” added Sarah.