Code of Conduct between Landlords and Tenants for Commercial Rents
Covid-19 and rolling lockdowns brought new challenges to the Landlord-Tenant relationship in 2020 and so far 2021 has not been much better. Many businesses have had to stop trading altogether, incurring severe losses. Businesses in the service industry may have been able to continue to trade, but they have completely changed their way of working and much expensive office space lies empty. It can be difficult for tenants under pressure to appreciate that their landlord relies on their rent for many purposes including pension income and to service borrowings.
Landlords and tenants have been negotiating rent reductions, rent deferrals, voluntary surrenders and other creative solutions between them for the past year. Now the Irish Government has introduced a Code of Conduct between Landlords and Tenants for Commercial Rents.
“The purpose of this code is to provide guidance to landlords and tenants in dealing with the financial difficulties brought about as a direct result of COVID19, in particular those businesses requiring a high level of physical customer interaction. The Code attempts to strike a balance between the rights of landlords and the rights of tenants while recognising that landlords too have financial obligations for which they rely on the rent to discharge.”
The Code provides various helpful measures which can be adopted by landlords and tenants where the tenant has been impacted financially by COVID19. These measures are aimed at bringing an amicable resolution to a potentially contentious situation.
The Code contains four overarching principles for landlords and tenants to follow, including acting swiftly and in good faith, recognising subsidies received, assisting each other when dealing with other stakeholders and engaging in alternative dispute resolution where an agreement cannot be reached between them using the Code.
It provides recommendations for negotiating arrangements for landlords and tenants. It stresses the importance of continuing to pay service charges and insurance while recognising that reduced use of buildings ought to reduce maintenance charges.
The Code can be read here https://enterprise.gov.ie/en/Publications/Publication-files/Code-of-Conduct-between-landlords-tenants-for-commercial-rents.pdf.
While the Code does not have a statutory basis it is very likely that Courts will refer to and use the Code to assess the conduct of landlords and tenants in any disputes that come before the Court.
The Code will continue to have effect until 31 July 2021 but given the likely ongoing prevalence of COVID19, this date may be extended.
If you are a landlord or a tenant and require assistance or any further information please do not hesitate to contact our property team headed by Cara Walsh by emailing cwalsh@mwmlegal.ie or telephoning 01 6765473.
*Before acting or refraining from acting on anything in this guide, legal advice should be sought from a solicitor.
