The Ministry of Housing, Communities & Local Government published the Code of Conduct between Landlords and Tenants for Commercial Rents in June 2020, and it will remain in effect until 24th June 2021. It is designed to provide guidance for commercial landlords and tenants negatively impacted by Covid-19.
The guidance provided by the Code is regarded as best practice, but is voluntary, and will not affect any existing legal arrangements between the landlord and tenant. However, it is important for a commercial lease solicitor to draw attention to the main principles when re-negotiating or negotiating a new contract.
The Code lays out a wide array of principles for those who have suffered a negative financial impact because of Covid-19. The full text can be studied here. It is designed to provide clarity for businesses when discussing rental payments and is relevant for all UK commercial leases held in any sector impacted by Covid-19.
It encourages landlords and tenants to be swift and transparent in their actions and to act reasonably and responsibly. Tenants who are still in a position to pay their full rent are advised to do so, while others should pay what they are able to. Landlords who are able to provide support to businesses are likewise encouraged to do so.
The Code has been shaped and endorsed by leading representative bodies, including the British Chambers of Commerce, the British Property Federation, and the British Retail Consortium. It involves a wide range of other organisations, including those from Scotland and Wales, and from the agriculture and small business sectors.
All parties are urged to work together to find mutually agreeable solutions, with flexibility and good faith on both sides. Potential arrangements could include a full or partial temporary rent-free period, extending payment periods, and waiving any interest on unpaid rents or rents paid in arrears.
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