As many businesses have closed their premises to tackle the on-going coronavirus (COVID-19) crisis, we take a look at how occupiers of commercial property can work with their landlords to achieve short term support to help at this difficult time.
Here are some helpful tips from our lease advice team on some of the ways in which you can seek help from your landlord.
To discuss this, or any other issue with your commercial property arrangements, don’t hesitate to contact our lease advice team for assistance.
Can I claim for a reduction in rent if I can’t use my premises or have cash flow issues?
It is important in the first instance to review your lease. This is the legal contract between you and your landlord. Ordinarily, rent payments can be suspended only when a property has been damaged or destroyed but it will depend on the lease.
At this time, many landlords accept that their tenants may have short term cashflow issues currently and are willing to assist where possible.
But it must also be remembered that your landlord may also have cashflow considerations.
This is a prime opportunity to have a balanced conversation with your landlord about what can be achieved – from a reduction in rent, to a rent holiday or rent deferment depending on what they are able to assist you with.
Is it possible to claim for a rent holiday?
In some circumstances, the landlord may agree to waive the rent entirely for a period of time (the rent-free period), for example, three months.
This is where an agreement would be reached that no rent would be payable for the rent-free period. Unlike a suspension of rent, the rent covered by the rent-free period would not need to be repaid to the landlord.
Can I postpone the March quarter rent?
Your landlord may agree to suspend the March quarter rent so that no rent would be payable until (for example) the June quarter.
The March quarter rent would, in this example be ‘postponed’ and would still be payable.
You would need to agree with your landlord the terms of the repayment of this postponed quarters rent, for example, over the next 12 months. And check whether interest be charged over this period.
Can I reduce my rent in any other way?
A landlord could also agree that the annual rent payable is reduced by a specified amount for a specified period to be paid either on the usual quarter days or monthly as set out above.
Can my landlord forfeit the lease if I cannot pay the rent?
Normally, if you withold your rent, your landlord could re-enter the property without notice and take possession without court action by changing the locks, and effectively, ending the lease.
However under the Coronavirus Act 2020, you are protected as forfeiture is now prohibited for 3 months, although once the prohibition has been lifted this will be an option and if the rent is in arrears with no concession agreed, the forfeiture could be put in place to recover the debt.
There are other options available to the landlord if you refuse to pay rents due under the lease:
- Legal proceedings – money claimed as a debt
- Statutory Demand – although stage 2 of this process is currently unavailable
- CRAR – but Bailiffs cannot enter if the property is closed and may not be willing to attend.
If you would like advice or assistance of these matters, contact our expert lease advice team and we will be happy to help.