Flexibility and forbearance key to weather COVID-19 crisis – Chambers Ireland welcomes new Code of Conduct Between Landlords and Tenants for Commercial Rents

Oct 1, 2020


Chambers Ireland, today (1 October), welcomes the publication by the Department of Enterprise, Trade and Employment Affairs of the voluntary “Code of Conduct Between Landlords and Tenants for Commercial Rents”.

Speaking this morning, Chambers Ireland Chief Executive, Ian Talbot said,

“As our members know from direct experience, and as our Business Community surveys have repeatedly shown, Covid-19 has caused income shocks which have had profound effects across the cities and towns of this country.

Everyone in the business community will need to demonstrate flexibility and forbearance if we are to limit the long-term economic effects of this crisis.

Throughout this crisis Chambers Ireland has argued that “those who can pay, should pay” and we continue to reiterate this. But this needs to be complemented with a realistic and pragmatic approach from all creditors, and particularly landlords that have tenants that are struggling to meet their obligations.

With the domestic economy bearing the brunt of the economic impact of Covid-19, a large number of otherwise viable businesses may become insolvent as the impact of unpaid invoices reverberates from creditor to creditor.

Liquidity effects will see many individual businesses struggle during this crisis, but the broad sectoral effects may mean that the commercial vacancy problem that already damages the local economies of our cities and towns could escalate if landlords and tenants do not engage with each other to ensure the sustainability of both parties.

It is essential that both landlords and tenants should act reasonably, swiftly, and transparently in finding a sustainable solution to this temporary crisis and all parties should act in good faith. A key element of this will be to ensure any scheduled repayment of deferred rent will not compromise the ability of affected tenants to recover from the crisis.

The Department of Finance’s presentation to the Irish Fiscal Advisory Council noted that “some firms/sectors [are] potentially not viable with social distancing”, suggesting that whole classes of industry are now under threat. This is likely to make finding replacement tenants a challenge, particularly if a failure to control Covid-19 leads to repeated cycles of restrictions and re-openings.

Where tenants and landlords fail to engage in the manner suggested by the Code of Conduct, both sides are likely to experience the worst outcome for their businesses.  Everyone will be poorer if businesses, that would otherwise be viable, are forced to avail of examinership, receivership, and liquidation.

It is only through sustained collective action that we will be able to regain control of the virus, and thereby mitigate the worst effects of this crisis on our society and our economy. Today’s Code of Conduct is a welcome approach, and we urge all stakeholders to engage with it.”


For further information contact Gabriel Doran, Communications & Media Executive on 086 608 1605 or email Gabriel.Doran@chambers.ie


Further Notes:

Liquidity issues and growing debt overhangs

Even before the most recent wave of restrictions occurred businesses of every kind are experiencing tremendous challenges. Our most recent survey (published 24 September) found that mounting debts are affecting businesses. Low levels of business activity and revenue have reduced the margin for many businesses and many firms are having difficulty receiving payments from clients and customers.

While the sector businesses are operating in has a strong effect on their revenue, the debt profile and the capacity of individual firms to meet their debt obligations is idiosyncratic, suggesting that a case-by-case approach will be more effective in sustaining individual businesses.

  • Micro/Small/Medium businesses are currently experiencing revenues which are 30% below what would be typical (Micro: -36%, Small: -36%, Medium: -33%)
  • Only 5% of firms are still completely closed, those still closed are typically smaller businesses and expect to remain closed for a considerable period (average of those still closed >20 weeks)
  • Microenterprises and Sole Traders are experiencing the lowest levels of business activity, at -42% and -33% respectively

The broad effect on the overall economy and the profound sectoral level impacts emphasise the common interest of both landlords and tenants when it comes to meeting the challenge of Covid-19.

Where, over the coming months¸ businesses become unsustainable it is likely that examinership will become necessary for those firms, with a potentially devastating impact on those for whom they were a tenant.

Should this occur to a great extent it is likely to lead to a rapid increase in vacancies which will further depress the commercial rental market.

  • Sectors affected most by social distancing have suffered disproportionate reductions in revenue (Hospitality: -56%, Education: -67%, Entertainment: -65%, Real Estate: -40%, Transportation: -47%)


Debt Serviceability

  • Debt serviceability will be a significant problem over the coming 12 months, more than half of all respondents will only be able to service 80% of their debt obligations over the next year
  • The overall average amount of debt that is serviceable is only 66%, which suggests that a minority of businesses will be able to service very little of their debt, though smaller firms are more vulnerable
  • Large within sector variation in the capacity to service debts means that accessing which firms can or cannot meet their obligation will need determination on a case by case basis


  • 47% of businesses which issue invoices are having difficulty receiving payment from clients, with microenterprises and small businesses disproportionately affected
  • The proportion of outstanding invoices which are beyond 90-days-due continues to grow (over 43% of invoices where the terms have been breached are beyond 90-days-due)
  • Businesses only expect between 52-67% of their outstanding invoices to be honours in the coming quarter
  • Smaller firms are more likely to be used as lines of credit by their customers
  • While there is strong variation across sectors, within sector variation is minimal


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