Rent code of practice a “waste of time” and “waffle”

The code of practice for commercial landlords and tenants introduced by the government earlier this month “changes nothing”, JKS CEO Jyotin Sethi has told MCA.

Speaking to MCA’s virtual event The Conversation, Sethi said the code just “encourages productive dialogue between landlords and tenants, which is what we were doing in any case. I think there’s lots more that’s needed, an extension of the lease enforcement moratorium for example, to give more time for those broken relationships and for negotiations to develop. So, for me it was it was a little bit of a waste of time.

“Rent is a key topic, like it is for everybody else, and we are in daily and weekly dialogue with all of our landlords at the moment, particularly the ones who we have the June quarter with, and we’re trying to reach some sort of agreement around June quarter in the next week to ten days.

”We’ve got 16 sites in London, 12 landlords, a combination of institutional and private landlords, everyone’s in a different position, some are cash rich, some are heavily leveraged, for others this is their only income stream.

“We are trying to be empathetic with their positions, particularly at the private end, and trying to structure a deal that works for us but also works for them.

Sethi said JKS was being “very open and honest, sharing financial information, being completely transparent. If we recover quicker, they can recover their rental levels quicker. We all have to share pain. That’s the approach we’ve taken, which we figured out early on was the only approach to take, even before lockdown hit us in March.”

Greater Manchester’s night time czar and Warehouse Project founder Sacha Lord agreed, saying the code of conduct was “just load of waffle that just pushed it straight back to the operator. What they suggested we’ve been suggesting to operators anyway. I think, sadly, there were many who were hoping that the government will come in at the last minute and save the day, and I do suspect that those people are going to have a serious issue in the next few weeks.”

Kate Nicholls said UK Hospitality was fighting to toughen up the code, saying it’s “too vague, it doesn’t take anything materially further forward. If you’re already in a good relationship, you’re already in dialogue with landlords, you are already starting to have these conversations and people are being a bit more serious about how you treat the rent debt.

“We will be pushing for it to be to be amended to make it a stronger framework with legislative teeth, because I think the biggest problem at the moment is that it’s voluntary not mandatory. It doesn’t link to any of the insolvency provisions for debt enforcement provisions, any court action, or any binding settlements.

“We’ve got quite a good model in the Australian code of practice that we’re trying to encourage the government to take some of the language from, to try and get greater force behind it, to increase the leverage that the lessee has. At the moment, as drafted, the code just reinforces the position that the landlord is in, and doesn’t give any incentive to make any concessions or movements.

“I think two urgent things this week are to press for that lease forfeiture moratorium, and to get this code strengthened, so that it can be used more effectively and finally to see if there’s any opportunity we can get some financial incentives to oil the wheels of that discussion.”