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High street retailers have attacked government guidance, designed to help coronavirus-virus hit businesses, as “miserably inadequate” for not affording them enough protection from landlords.
The latest draft of the code of practice seen by the FT lays out the steps the UK government expects landlords and tenants to take “in order to share the property-related costs and business risks of the Covid-19 crisis in a proportionate and measured way”.
The code, which is voluntary, states tenants should pay rent if they can, even if only partially, and landlords who are in a position to show clemency should do so. It also said tenants should prioritise paying their service charges before rents.
It encourages the parties to agree a rent payment plan which prevents tenants being evicted, but stops short of extending an outright ban on evictions which is due to end on June 30.
James Daunt, chief executive of booksellers Waterstones, told the FT the code “isn’t worth the paper it’s printed on” as it left tenants exposed.
“It’s perfectly reasonable to have a code of conduct and you would assume that most people would follow all of its provisions in normal times. But what is needed right now is statutory protection against aggressive tactics by landlords.
“As soon as the current protections expire I think there will be some pretty serious consequences for smaller retailers in particular,” he said.
Many tenants are grappling with landlords over unpaid rent which was due in March, and are trying to reach an accommodation ahead of the next quarterly payment date on June 24.
Barely a third of retailers paid their rent on time in March, after the government introduced legislation preventing landlords from evicting them two days before rent was due.
June’s rent day is expected to bring more pain, with landlords bracing for receipts to fall as low as 10 to 20 per cent of normal levels.
The government has circulated the draft to tenants and landlords as it seeks to finalise the code by the end of this week.
Jonathan Downey, co-founder of London Union, which runs a number of event spaces and street food venues in the capital, said the guidelines were “miserably inadequate” in the protections they provided to tenants. He has been lobbying ministers to back a nine-month rent holiday for retail and hospitality businesses.
“Tenants need protection from the worst kind of land-grabbing, aggressive, threatening landlords, none of whom will pay any attention to this,” he said.
Ministers have not yet made clear whether they will extend the ban on evictions beyond the end of June, but the draft code notes that other intervention “may be necessary going forward to support the financial health” of tenants.
Landlords responded to the draft guidance more positively, but said more needed to be done.
Melanie Leech, chief executive of the British Property Federation, which represents property owners, said the code would build “on the many examples of good practice and reinforce the imperative for constructive collaboration,” but that “without government grant support many businesses face an insurmountable challenge”.
Vivienne King, the chief executive of Revo, the trade group for retail property owners, said the code should encourage “property owners and occupiers to come to the table and agree new ways of working together”.
The government did not respond to a request for comment.
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