As we approach the June quarter day, it is not only landlords who will be keeping a close eye on rent collection.  For lenders rent collection is also very important.

So far we have largely seen that lenders have been supportive of landlords in relation to unpaid rent for the March quarter day – in some cases lenders have agreed to variations and waivers in financing arrangements.

With rent collection this month likely to be far worse than the March quarter day and with no certainty over when social distancing restrictions will be fully eased, the next few months are going to be challenging for lenders.  Some lenders could start to take a tougher stance with landlords.  For properties where a lender does not have valuable additional security (e.g. a parent company guarantee), we could later this year see a number of lenders considering whether to appoint a receiver under the Law of Property Act 1925 to sell the property.

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There has been much discussion of late around the effect of COVID-19 on leases, focusing in particular on the non-payment of rents by tenants and the limitation on the landlord’s usual arsenal of options for non-payment. As the lockdown eases and tenants prepare to return to their premises, there are likely to be other lease provisions which need to be considered by landlords and tenants. This article considers a number of typical lease provisions which tenants may like to consider.

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As we slowly start to ease out of lockdown, the impact of how the retail landscape will be changed, remains to be seen.  Some retail stores are starting their preparations to be ready to open again in England from 15 June 2020, however there are a number of factors that store owners will need to take into account:

How will shopping as we know it, change?

  1. The Government has made clear that social distancing must remain in place for the foreseeable future, maintaining a two metre distance between people. The public are mostly willing to help enforce social distancing by queuing to be allowed entry into the bigger stores (e.g. supermarkets and homeware stores) due to the requirement of basic needs. What remains to be seen, is whether the average shopper will queue merely to visit a store on a casual basis, when they have no guarantee of actually buying an item, and no genuine necessity to do so.

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As the June quarterly rent day looms, the government has announced it is set to publish a new code of practice to support high street landlords and tenants. The code is said to be designed to provide “clarity and reassurance” over rent payments by encouraging “fair and transparent” discussions between landlords and tenants. It also aims to provide guidance on rent arrear payments and treatment of “sub-letters” (which we assume means sub-tenants) and suppliers.  This code will add to the package of protective measures introduced by the government for tenants in the commercial sector who failed to pay the March quarter’s rent, including the moratorium on forfeiture, the stay of possession proceedings, the limitations on the use of Commercial Rent Arrears Recovery and the restrictions on statutory demands and winding up petitions.  Initially the code will be introduced on a temporary basis. The government has indicated they may look to make it mandatory if considered necessary.

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The private rented sector (PRS) in the UK has grown significantly in the last decade and the multifamily sector in particular has attracted substantial investment from new overseas investors, with Greystar, Atlas and Courtland each gaining a foothold in the UK market.

According to the British Property Federation (BPF), there are currently over 150,000 multifamily units completed, under construction or with planning permission in the UK and nearly 75,000 of these units are in London, showing the sector’s growing popularity which is only set to increase.

Coronavirus has forced many countries in the world into a state of lockdown – and the UK is no exception. This has caused many people to reflect on their current living and working arrangements, as never has it been more important to have a flexible place to live, work and play.

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The UK Government has temporarily banned commercial landlords from issuing statutory demands and winding up petitions against commercial tenants unable to pay their bills due to coronavirus.  A statutory demand can be issued where a corporate debtor owes £750 to a creditor.  If the debt is not paid within 21 days of the issue of the statutory demand, the landlord creditor can then issue a winding up petition against their tenant.  Although in most cases a landlord does not ultimately want their tenant to be wound up (as that could lead to them having to take back the premises), the procedure is sometimes used to put pressure on tenants to pay their rent.  Under these new measures, any winding up petition that claims that the company is unable to pay its debts must first be reviewed by the court to determine why. The law will not permit petitions to be presented, or winding up orders made, where the company’s inability to pay is the result of COVID-19.

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Although it is uncertain what the likely long-term impacts of the pandemic on the development industry will be, the short-term impacts are clearly significant.

The real estate development industry is looking to the Government for immediate relief in the following areas::

  • automatic extension of the deadline for commencement of development under planning permissions;
  • the introduction of a statutory review process for affordable housing and other planning obligations based on new viability considerations; and
  • extension to Community Infrastructure Levy (“CIL”) payment deadlines.

There are precedents for the first two elements of this from the then Government’s response to the financial crisis (the CIL was, of course, not in place at that time).

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