The Government intends to publish a code of conduct on commercial rent payments to support businesses during the pandemic.
The guidance is expected to promote greater flexibility in rental negotiations between landlords and commercial occupiers such as retailers, many of which have been struggling to pay rent amid lower footfall and falling revenues.
Many of the region’s biggest landlords have reported challenges collecting rent during the lockdown, with Trafford Centre owner Intu Properties stating in March that it had received only 29% of quarterly rents due compared to 77% at the same time last year.
Overall commercial rent collection in the North West dropped 35% in April compared to the average percentage for the last two years, figures from Re-leased, a cloud-based property management platform, revealed this month.
Many landlords have responded to the challenges by agreeing to let tenants pay rent on a monthly basis, or defer payments altogether until later in the year, to ease cashflow. Still, research by Altus Group published today found that the cost of high street insolvencies stands at its highest level since 2012, due to high street administrations.
In a statement last week, the Government said it has established a working group with the aim of developing a code to encourage “fair and transparent discussions” between landlords and tenants over rental payments during the pandemic.
The resulting code is expected to include guidance on rent arrears payments and treatment of sub-letter and suppliers, to “help ensure that no single part of the chain shoulders the full burden of payment”, the statement said.
The group will seek to gather input from a range of businesses, but did not say when it intends to publish the code.
Communities Secretary Robert Jenrick said: “We are developing a new code of practice, working alongside the industry’s leading bodies, to provide that clarity and reassurance to both commercial tenants and their landlords in recognition of the challenges they are facing as a result of coronavirus.
“We expect all parties to come to the table so our high streets and town centres are in the best possible position to come back from these challenges.”
Helen Dickinson, chief executive of retail industry group the British Retail Consortium added: “The coronavirus pandemic has accelerated longer-term trends in retail property. Rent demands are increasingly out of kilter with current property values and many retailers are being forced to pay rent on closed stores.
“[The code] is as a positive first step…to ensure that otherwise viable businesses are not forced into administration. However, all sides must be prepared to do more if necessary, given that the commercial lettings market needs wider reform.”