Our June 2021 summary of the latest developments in Property law and practice is as follows:

At the start of April 2021, the Government updated its “Code of Practice for commercial property relationships during the COVID-19 pandemic.” The update has added an annex intended to be used by tenants and landlords in discussions about rent payments, dealing with rent arrears and on-going lease terms.

The annex provides a template so that, as a basis for the start of negotiations, a tenant can set out the extent to which it has a positive past track record regarding payments of rents. There can also be an indication of how business turnover has been affected by the pandemic, an estimate of how and to what extent business turnover is expected to recover, details of rents paid since 25 March 2020, an offer to meet as much of the arrears accumulated during the COVID-19 restrictions as possible, and an offer for meeting ongoing requirements for payment. In return, a landlord can indicate whether it accepts its tenant’s offer, is unable to do so (giving reasons why), and whether it wishes to propose a counteroffer, addressing both accrued arrears and on-going payments and other obligations. This should provide a useful, standardised template for future negotiations.

The Land Transaction Tax (Specified Amount of Relevant Rent) (Wales) (Amendment) Regulations (SI 2021/119 (W32)) have increased to £13,500 the ‘relevant rent’ under paragraph 34, Schedule 6, of the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017. This is relevant to whether or not a premium paid by the tenant on the grant of a lease of non-residential property enjoys the benefit of the nil-rate band of tax.

As under SDLT, Land Transaction Tax is prima facie payable on the grant of a lease of non-residential property on both a premium paid by the tenant for the grant and on the annual rent. Nil-rate bands apply both to the tax chargeable on the rents and on the premium. However, as regards to the premium, if the ‘relevant rent’ is at least the specified amount, the nil-rate band does not apply in relation to the premium. Hence, under paragraph 34 and the amendment regulations, the nil-rate threshold for a premium paid by the tenant for the grant of a lease is removed where the annual rent is at least £13,500.

HM Treasury has published a consultation paper on proposals for a new property tax for residential developers: “Residential property developer tax: Consultation on policy design”. This is intended to be part of a package of measures to deal with the problem of unsafe cladding in multi-occupied buildings, which includes a new “Gateway 2 levy” to be applied when developers are seek planning permission to build certain high-rise buildings in England and a new tax on the residential property development sector. This paper focusses on the Residential Property Developer Tax only. The government proposes that the tax would apply from 1 April 2022, to profits recognised in accounting periods ending on or after that date. The consultation runs until 22 July 2021.

Following the extension last month of existing restrictions on forfeiture for non-payment of rents of commercial lease rents, the use of Commercial Rent Arrears Recovery, and the use of winding-up petitions and statutory demands, which are now all extended to 30 June 2021, the Government published a call for evidence on 6 April 2021: “Commercial rents and COVID-19: call for evidence”.

While restrictions on landlord enforcement action might appear to be ending at the end of June, questions arise as to whether the restrictions will be lifted immediately, and in full, or whether there will be a gradual easing.

The call for evidence, which only runs until 4 May 2021, is worth inspecting to see the range of options the Government appears to be considering for dealing with unpaid rents once restrictions start to be eased.