Addington welcomes positive engagement with occupiers as suggested in forthcoming MHCLG code of conduct – but believes future collaboration should not just be a “one-way process”

The Government has announced preparation of a Code of Practice for owners and occupiers to encourage collaboration in reaching agreement over rent payment. It has made clear that this is a voluntary Code in the hope rent negotiations will follow it and has stated:

• The Code is not intended to be the sole intervention to support struggling businesses, either landlord or tenant, but will embed good practice Government would like to see from both sides and support smaller businesses in negotiations
• It does not prevent further Government interventions
• The impact of the Code will largely be dependent on the number of organisations who commit to acting in this way. A Steering Group has been established to shape and agree the Code working with other bodies such as REVO, BPF, CREFC (and other occupier groups), taking into account wider industry recommendations.
• In terms of timetable it is planned that Government and the Steering Group will publish the code between Wed 17^th and Friday 19^th June, ahead of the June Quarter Day.
• The Code is set to continue until 24 June 2021. At this point it has not confirmed whether the moratorium on forfeiture, winding up orders and statutory demands will be extended for how long or at all- but some extension is expected.
• Service charge arrangements are also being amended to encourage cost savings by owners being passed on to occupiers in the most efficient way.

Commenting on the planned Code, Tim Cornford, Retail Partner of Addington Capital, the specialist property investment and asset manager, said:

“In the spirit of the Code, we welcome the opportunity to engage positively with occupiers and tenants and will work with them to provide support where we can. Occupiers that have been open about their financial position have already had confirmation of support from us, and we encourage others to do the same when making claims for rent concessions and deferment.”

Addington, which manages a portfolio of retail properties across the UK as well as 4 regional shopping centres added that it is open to looking at turnover-based lease structures, where occupiers “are willing to be transparent about historic trading volumes.” However it clarified, “The path to coming out of this will be shorter and smoother if we can work together in an open and constructive manner.”

And as Tim Cornford continued, “There are a number of (multi-billion turnover) occupiers that are being totally unreasonable in their approach and are trying to take advantage of the situation for their own gain and at the expense of the continued operation of the centre they occupy.

We feel that where occupiers are being unreasonable in their demands and that mitigation is unsuccessful, there should be a lifting of the current restriction on the ability to use statutory demands and winding up procedures.”

“This really needs to be a two-way process- both for our industry to recover and for us all to move forward. We hope when the Code is published next week it takes into account the very serious concerns of property landlords who are working hard to “keep the show on the road” for all of our tenants and not just consider the plight of those occupiers who have been shouting the loudest.”