11 December, 2020
On 1 October 2020, The Department of Enterprise, Trade and Innovation published the Code of Conduct between Landlords and Tenants for Commercial Rents. The Code provides guidance for commercial Landlords and Tenants whose lease arrangements have been negatively impacted by Covid-19 and will remain in effect until 31 July 2021.
The Code provides an array of principles for parties who are considering re-negotiating the terms and conditions under their lease as a result of the financial hit from Covid-19. The Code advises that the Landlord and Tenant should:
The Code notes that Tenants who can pay in full under the lease should continue to do so. Similarly, Landlords should make themselves approachable to Tenants to discuss any requests for assistance where the Tenant is experiencing temporary and significant financial hardship. Tenants seeking any concessions from their landlord should be clear about why this is necessary. Landlords should provide concessions where they are reasonably able, in consideration of their own financial situation. Landlords should similarly be transparent with Tenants as to why they may have to refuse requests for assistance.
Where a Tenant wishes to renegotiate their rent liability, the Code provides a list of factors for Landlords to consider when assessing the Tenant's financial position, such as:
Furthermore, the Code provides a list of potential arrangements that both parties could agree to, including:
It is important to note that the guidance provided by the Code is considered to be best practice and is voluntary, but does not alter any underlying legal relationship between landlord and Tenant, but it does identify important principles for both Tenant and Landlord to consider when beginning re-negotiations. You should seek legal advice before offering or accepting any changes to your terms and document them in a legally binding arrangement.
For more information contact Jo Higham in our Commercial Property department via email or phone on 01772 220177. Alternatively send any question through to Forbes Solicitors via our online Contact Form.
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