Landlord and Tenant: Rent Payments During the Coronavirus Lockdown

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In these unprecedented times, both landlords and tenants may need to think about the leases that they have in place. If a tenant is facing financial difficulty, then they should speak to their landlord sooner rather than later.

Rent Holidays

Several of our landlord clients are seeing requests from their tenants for either rent holidays or other rent concessions.

As a tenant, it is far better to speak to your landlord and reach an agreement that you both agree on rather than just stopping rent payments. If you stop rent payments without having spoken to your landlord, then that could cause problems for you at a later stage when normal business resumes. Before having the conversation, you should think seriously about what you can afford to pay and when.

Options for landlords

As a landlord, if you are approached by your tenant for a rent holiday or a rent reduction then there are a variety of options that can be considered. For example:

a) You could consider a rent holiday for a fixed period.

b) You could consider taking a reduction in the rent for a fixed period. This could be with the alternative of either paying it back/recouping the rent over a period such as the following three quarters or not.

c) You could suspend the rent. This should definitely be for a fixed period and that period should be agreed between the parties and again could be with a repayment of the suspended rent over a period.

d) If you are holding a rent deposit, you could agree that you would deduct the rent from the rent deposit. You probably need to agree with the tenant by what date they need to make up the deficit in the rent deposit.

e) You may agree to accept payment of the rent in arrears rather than in advance.

f) You could agree to terminate the lease. If you accept a surrender, then you will need to think about points such as dilapidations and the fact that business rates will become payable by you as the landlord.

Whatever you, as the landlord or tenant, agree, this should be put in writing so that both parties are clear as to what has been agreed and for how long.

What can you not do as a landlord?

What a landlord cannot do at the moment is to forfeit the lease (see our article on Commercial Leases Moratorium)

We have, of course, just passed the March rent quarter day. Some landlords and tenants may have agreed an arrangement between them for the March quarter’s rent. If so, our suggestion is that you record this formally. You should also be aware that you may have received the March quarter’s rent but business tenants may have been able to meet the March quarter but may be struggling by the June quarter particularly if lockdown continues. It will be worth thinking, whether you are a landlord or a tenant, what can be offered either if asked or if you need to ask.

If you need any advice on the above or on any other commercial property issue, please contact Elizabeth Dolding at e.dolding@warners.law or 01732 747911.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

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