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In these unprecedented times we are being approached more and more by both landlords and tenants about rental holidays for business premises.
Landlords are asking us to assist with tenant’s requests to delay, cease or have a rental holiday and tenants are asking our advice on approaching their landlord for similar rental concessions.
Whilst the Government may have issued emergency Coronavirus legislation to assist businesses with their rent, the legislation is actually quite limited in scope.
With compromise and understanding in this unfortunate situation that we all find ourselves in, it is possible for landlords and tenants alike to find common ground and come to a quick and swift agreement whilst not compromising the long term validity and provisions of the lease. We are here to help any landlord who may be approached by their tenant for rental concessions and we are also here to help any tenant who may wish to approach their landlord on what might feel like a delicate and difficult subject.
Do I need a written agreement for a rental holiday or rental concession?
It is imperative that a correctly worded, professionally written agreement for a rental holiday or a repayment structure for rent is entered into between the parties so as not to inadvertently and permanently vary the terms of the lease.
What are the problems with the Government’s emergency COVID-19 legislation?
When examined closely, the emergency Coronavirus legislation issued by the Government only prevents landlords from evicting tenants for non-payment of rent until the protection period expires on 30 June 2020, or later if the Government extend the protection period.
In fact the Government itself stated in its own press release of 23 March that the “Measures support ongoing conversations between landlords and tenants about voluntary arrangements”. In other words, the Government are assisting Landlords and Tenants by building a foundation for them to build rental concession negotiations upon.
Ultimately, the rent due during the protection period will still be payable after the protection period ends which has the potential to place enormous financial pressure on a business tenant whom will have accumulated a substantial rental debt to the landlord. The legislation does not therefore give the tenant either a rental holiday where the tenant is “let off” the rent during these difficult times nor any structured repayment plan of any rental debt accumulated.
Business Rental holiday/concessions: What should I do?
With a correctly worded, professionally written agreement, we can assist the parties in going beyond the short term assistance of the Government by including a rental repayment schedule or indeed agreeing that the Landlord will forego all or part of the rent due for an agreed period of time. The foregoing of part of or all of the rent due during this time may well of course in the long run also assist the landlord by preserving the very existence of the tenant and therefore the Landlord’s continued income stream from the property.