In light of the coronavirus shutdown, commercial property specialist, Richard Bowater, examines urgent steps to be considered by commercial landlords and tenants. Richard can be contacted by email or by completing the contact form at the foot of this page.
These are indeed worrying times for us all, not least for both business and land owners.
If you are a tenant of commercial premises, they will either be closed already or closure is likely to be imminent. Without an income from your business, how will your rent and other outgoings be paid?
If you are a commercial landlord, then your rental income is under threat. Are you facing the possibility of empty premises? Is there insurance in place to cover this business interruption?
Government protection for commercial tenants
On 23 March 2020, the government announced that commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction, but the emergency legislation currently being fast-tracked through parliament goes only so far as saying “no business will be forced out of their premises if they miss a payment in the next 3 months.”
At BLB we believe strongly that it is in the interests of both the landlord and the tenant to work through this difficult period together. When we emerge from this crisis, landlords will need readily available tenants and business owners will need premises to operate from – and it makes sense for landlords and tenants to re-engage with people they already know.
Indeed, over and above the limited protection included in the Coronavirus Bill, the government is actively encouraging commercial landlords and tenants to engage with one another pragmatically to agree a way forward.
So what can be done?
One solution which is likely to prove popular is a ‘rent holiday’, with any rent catch up to be added to the rent payable in the future.
However, whatever arrangement is agreed, to ensure clarity it will be crucial to document it expressly. The tenant will be looking for certainty regarding their current position and the landlord will want the peace of mind of knowing there will be no ‘forgetfulness’ with regard to the rent catch up when normality returns.
We are able to assist urgently with preparing any such documentation. Contact us by email or by completing the contact form at the foot of this page.