A safety net for business tenants

  • Author: Andy Hellier
  • Date: 20th April 2020

Since the COVID-19 pandemic began to sweep across our nation, we have seen unprecedented measures being put in place to protect not only our lives, but our businesses and livelihoods too. Everyone is concerned for their health but also for their jobs and companies, as when this is all over, we will all be tasked with getting back to where we were before the crisis hit.

Protection for business tenants

A safety net for business tenants - HLPThe government guidance issued on 23 March confirmed that businesses will not be evicted from their premises if they miss a rent payment in the following three months. This has given companies a bit of a safety net in the event that the worst case scenario occurs. 

Where help is needed with your rent payments, opening a dialogue with your landlord to seek an agreed rental concession should be your first 

option. It is crucial that occupiers do not rely solely on the temporary protection from eviction; whilst tenants cannot currently be evicted, landlords are still able to pursue rental debt via statutory demands and winding up orders. 

Occupiers in the retail, leisure and hospitality sectors should also investigate the rates relief and grants that the government has made available. In addition to seeking rental concessions where necessary, tenants should also  re-familiarise themselves with their lease.

Break clauses 

COVID-19 has drastically changed the way a lot of us work and as a result, occupiers' space requirements are likely to change accordingly in the future. Whether or not your property is surplus to requirements, you should examine your lease to confirm if you have any options to break your lease. Tenants with break clauses that they do not intend to exercise, could instead use these as a negotiating tool with their landlord in order to agree a rent-free period in exchange for removing break options from their lease in the future.

Rent reviews

It is important to check your lease to confirm if you have any upcoming rent reviews, to plan and gain advice in good time.  It is too early to see the end result on rental levels from the current crisis, however, with a heavily reduced number of leasehold transactions occurring, landlord expectations for increased rents at rent reviews may need to be revised.

Lease restructuring

In uncertain times, there is sometimes little incentive for occupiers to commit for a longer lease term. For businesses who are confident in committing to their premises in spite of the current environment, it may be a good time to enter discussions with your landlord, who is likely to be particularly amenable to securing future rental income and may offer favourable terms.

Pension funds

Although the government and some landlords are offering options to miss or defer payments right now, it is important to remember that if your business is able to operate efficiently from home or online, you should do all you can to keep up your rent payments. A great deal of commercial property is owned by pension funds and failure to pay rent (except in the most extreme circumstances) will ultimately have an adverse effect on the payment of pensions to the older generation  and those vulnerable within our communities.

We can help

Hellier Langston’s lease advisory team is one of the most active on the south coast, boasting a wealth of expertise. The team is experienced in all areas of lease advisory including rent reviews, lease renewals, the operation of break clauses and the negotiation of lease surrenders and restructures.

We are working remotely at this time, so please get in touch if there’s anything we can assist you with.  Our in-depth knowledge of case law, litigation proceedings and legislation, including the Landlord and Tenant Acts, ensure our clients receive the best possible service. 

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