Preparing for April 2021 – what do you need to do?

The Government has announced a £750 million funding package for charities to ensure they can continue their vital work during the coronavirus outbreak.  This is for a 3 month period and further specific funding may be made available.

Charities which are businesses can also access the Government’s Coronavirus Business Interruption Loan Scheme (CBILS) – Please see our Funding and Finance FAQ’s.

Commercial leases generally prevent a tenant from withholding payments of rent. If a tenant stops paying rent there will be a breach of the tenant’s covenant to pay rent which, strictly speaking, will entitle the landlord to forfeit the lease and/or seek to recover the arrears in the courts. 

However, on 23 March 2020, the Ministry of Housing, Communities and Local Government announced that all commercial tenants in England, Wales and Northern Ireland missing rent payments are to benefit from a government ban on forfeiture of their lease. This change, which will prevent landlords from terminating leases and evicting commercial tenants, is included in the Coronavirus Bill. It will come into force very shortly (once the Coronavirus Bill receives Royal Assent, which is expected to be in a matter of days) and will last until 30 June 2020, with an option for the government to extend this deadline.

It is anticipated that many commercial tenants will take advantage of the reprieve and withhold their rent. Importantly note the rules will apply not only to principal rent but to “any sum a tenant is required to pay”, leaving the burden of supplying services and insuring the premises on landlords.

It is also important to note however that the protection offered by the government is from the threat of forfeiture should tenants withhold rental payments. The liability to pay the rent however remains an interest on unpaid rents will accrue. Furthermore, remedies other than forfeiture may be pursued by the landlord e.g. service of a statutory demand before insolvency or ordinary litigation proceedings for arrears etc.. Tenants then ideally should look to reschedule or suspend rental payment through discussions with their landlord.       

The advantage of this being you might be able to negotiate a sensible and manageable repayment program in respect of the suspended rent, free of the threat of litigation.

Many charities have money that are considered restricted funds which are given to the charity or raised for a specific purpose.  The Charity Commission gives guidance on this, please see the link below. Depending on the circumstances in which these monies have been given to a charity or raised you may or may not be able to use them.

Monies raised in an appeal or specific fund raising campaign are unlikely to be available as it is likely to be impossible to get the permission of the donor to change the use.  If however you have had monies donated for a specific purpose and you can identify the donor you can use these funds for general overheads and to pay wages etc. if you receive the donor’s specific permission to do so.

As discussed above, Covid-19 will inevitably deplete the workforce of housing providers in the foreseeable future. It would be prudent to consider making short-term policy changes to deal with this situation and manage the expectations of tenants going forward. A key policy change to consider is the extension of the standard lead-time for completing all non-urgent repairs and inform tenants of this change.

Such a change will also reduce pressure on landlords and front-facing staff.

As above, employers must protect the interests of their staff, particularly regarding health and safety. Extra care should be exercised when assessing the level of emergency of a repair on a case by case basis. All efforts should be made to reduce the number of attendances at properties by repair staff, whilst keeping all tenants safe.

As ever, communication is key – the pandemic cannot be used as a blanket excuse for abstaining from all duties and obligations. Housing providers must take a pragmatic approach in safeguarding customers whilst considering the interests of is workers. Maintaining lines of communication with all parties remains paramount.

This free Getting back to business webinar was held on Wednesday 6th May. On this video, employment partner Paul Scope and associate Flora Mewies looked at your options if you need to flex your employee resource or reduce cost without reducing headcount. This may apply across the business or to particular functions. They discussed a range of options when the furlough scheme comes to an end, including: lay off, short time working, reduced hours, reduced pay and other ways to be flexible.

They also discussed the pros and cons of each option, and cover what you will need to undertake with each of these routes.