Government Hoping to Keep the Peace Between Landlords and Cash-strapped Companies

Written by: Keith Tully

Man showing his empty walletThe government is reported to be readying a plan that it hopes will keep the peace between the differing sides in commercial rent disputes that have emerged across the country.

So many companies are struggling for cash flows in the context of the coronavirus pandemic and lockdown that landlords look set to find themselves significantly out of pocket as the next quarterly rent payment date approaches.

Details are yet to emerge of what the government’s policies will be but the Telegraph reports seeing draft guidance relating to a voluntary code that will encourage the use of third-party mediators in cases of commercial rent dispute.

However, there are concerns that a voluntary code might not be enough to enable renter companies to reach any sort of compromise deals with their landlords.

Indeed, some within the property sector are convinced that a voluntary code would not be sufficient to solve the problems the industry is currently facing, with legally binding rules regarded in some quarters as a much better option.

The fundamental problem is that many high street businesses and retailers have struggled desperately to drive sales and generate profits against a backdrop of COVID-19, which has led to rental demands not being met on a very significant scale.

Estimates suggest that property owners across the country only received around a third of the rental payments they were due for the month of March this year.

According to the Telegraph, a government-backed code of conduct for the commercial property sector would ask tenants to pay what they can and urge landlords to consider offering rent deferrals, cost reductions and rent-free periods where possible.

Melanie Leech, the chief executive of the British Property Federation, has insisted that the government should be doing more to support property owners who have been badly impacted by the coronavirus pandemic.

She describes the lack of support for commercial sector landlords as being a “missing piece of the jigsaw” within in the government’s broader support plan for the UK economy.

“Without government grant support many businesses face an insurmountable challenge to recover and our high streets risk being starved of investment for the future,” Ms Leech is quoted as saying.

Keith Tully

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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