Section A – Introduction

Many Managing Trustees are receiving requests from tenants of their residential properties to reduce or even suspend rental payments during the COVID-19 outbreak. These are exceptional times and Managing Trustees will find help and guidance for dealing with these types of requests from their tenants in COVID-19 FAQ 9.1 and the FAQs section of the AST Side-Letter Questionnaire (Questionnaire). In particular, please bear in mind that as prudent charity trustees and in accordance with Methodist Church best practice, Managing Trustees are not encouraged to offer any concessions themselves.

Sintons LLP, one of the law firms on the Methodist panel, have offered to help Managing Trustees who wish to agree rental concession by making a service available to them to help document these temporary arrangements as cost effectively as possible. Sintons will produce a letter documenting the temporary arrangements that have been agreed between Managing Trustees and their tenants (AST Side-Letter) for a fixed fee of £200 plus VAT. A Questionnaire has been designed specifically for this purpose which allows Managing Trustees to provide all the information required to allow Sintons to legally document the temporary arrangement. The fixed fee has been agreed on the basis that Managing Trustees complete the Questionnaire in full and provide a copy of the competed assured shorthold tenancy agreement (AST). Please refer to the Newshub article “Payment of rent concerns raised by tenants” for further details.

The service is available where:

  • Managing Trustees (together with TMCP) are the landlord of residential property held on the Model Trusts under a standard Assured Shorthold Tenancy (AST).
  • Managing Trustees’ tenants have indicated they are unable to meet some, or all of their rent as a consequence of COVID-19 and having considered the points in FAQ 9.1 the Managing Trustees have decided to accommodate such a request.
  • There are no rent arrears which have arisen prior to COVID-19; and
  • There are no ongoing or pending eviction proceedings (court action).

This process note sets out the steps to be taken if Managing Trustees are minded to agree rental concessions and decide to use the service that has been offered by Sintons to produce a letter documenting the temporary arrangements with residential tenants (see below). Managing Trustees can of course use a different solicitor. If Managing Trustees want to use a different solicitor then they should refer to the process referred to in COVID-19 FAQ 9.2 and contact TMCP so that we can approve the document recording the temporary arrangements.

Please refer to the Non-Residential Lease Concession Process Chart for details of the process that is being offered by Blake Morgan LLP in relation to similar rent concessions with non-residential tenants who occupy Methodist Model Trust property under a lease.

Section B – Process Chart

This process is to be followed where Managing Trustees wish to use the service offered by Sintons to produce an AST Side-Letter:

1.

Complete the AST Side-Letter Questionnaire (Questionnaire) to provide Sintons LLP with all the information they require to document the temporary arrangement agreed between Managing Trustees and their tenant(s):

 

The Questionnaire is available using this link: AST Side-Letter Questionnaire


It is important that Managing Trustees complete the Questionnaire as fully as possible to provide the information that Sintons need to produce the AST Side-Letter.


=> If the Managing Trustees have completed the Questionnaire in full proceed to Step 3.


=> If the Managing Trustees are having difficulties completing the Questionnaire proceed to Step 2.


Note that Sintons have confirmed that the fee of £200 plus VAT has been agreed on the basis that the Questionnaire is completed in full. Sintons have said additional fees may be likely if information is missing/unavailable or the circumstances of your particular AST fall outside the parameters of the circumstances provided for in the Questionnaire.

2.

Contact TMCP Legal for help in completing the information required in the Questionnaire if you do not understand what information you need to provide or need assistance.


TMCP may also hold a copy of the signed and dated AST on file. If that is the case TMCP can provide you with a copy which can then be sent to Sintons along with the completed questionnaire.


=> Once the Questionnaire is complete proceed to Step 3.

3.

Send the completed Questionnaire to BOTH laura.peace@sintons.co.uk and legal@tmcp.methodist.org.uk (along with a completed copy of the AST).


TMCP ask for a copy of the completed Questionnaire so that TMCP Legal is put on notice that Sintons are instructed, we are made aware that an AST Side-Letter is likely to be on its way and can ensure that resources are available to approve this quickly as part of Step 6.


=> Sintons will proceed to Step 4.

4.

Sintons will document the concessions Managing Trustees have agreed with their tenant(s) as set out in the completed Questionnaire and send a copy of the draft AST Side-Letter to the Managing Trustees for approval (copying in TMCP Legal).

 

=> proceed to Step 5.

5.

Approve the AST Side-Letter – Managing Trustees.


Managing Trustees will review the draft AST Side-Letter to ensure that it reflects what has been agreed with the tenant(s) and alert Sintons immediately if there are any concerns so that these can be addressed and the final form of AST Side-Letter produced.


=> Once the AST Side-Letter has been agreed by the Managing Trustees, proceed to Step 6.

6.

Approve the AST Side-Letter – TMCP.


TMCP will review the AST Side-Letter within one working day to double check that it follows the agreed form of side-letter and the information provided in the Questionnaire.


=> TMCP will confirm approval of the AST Side-Letter or indicate any amendments that may be required so that Sintons can proceed to Step 7.

7.

Sintons will produce the final form of AST Side-Letter ready to be signed by the Managing Trustees, their tenant(s) and any guarantor(s) and send this to the Managing Trustees (copying in TMCP).


=> Proceed to Step 8.

8.

The Managing Trustees can now enter into the agreed form of AST Side-Letter and allow the varied rent to be paid (or suspended) in accordance with its terms:


The agreed AST Side-Letter will need to be signed by the Managing Trustees, their tenant(s) and any guarantor(s) and then dated.


Sintons will be able to provide the Managing Trustees with guidance on arranging for the document to be signed by the Managing Trustees, their tenant(s) and any guarantor(s) in line with the Government’s social distancing requirements.


Managing Trustees need to:

  • File a copy of the AST Side-letter signed by the tenant(s) and guarantor (if appropriate) with the Church or Circuit deeds.
  • Consider and keep under review the terms of the AST Side-Letter ensuring that these are followed closely.
  • Diarise the end of the Rent Reduction Period or Rent Suspension Period as set out in the AST Side-Letter and ensure that rent reduction/suspension ends on the date specified and the shortfall is paid in accordance with the terms of the AST Side-Letter.
  • Contact TMCP Legal as a matter of urgency if there is any suggestion that the terms will not be followed e.g. the tenant(s) is requesting a delay in paying any shortfall in rent beyond the dates set out in the AST Side-Letter.

Managing Trustees need to bear in mind that immediately at the end of the period provided for in the AST Side-Letter, the arrangements with the tenant(s) must return to normal. If there is a need to vary the arrangements again at that time, contact TMCP Legal as a matter of urgency.

 

Section C – Further Guidance

Managing Trustees may find the following guidance notes and documents of assistance:


If you have any queries in relation to the guidance in this document please contact TMCP Legal for further assistance.