Commercial Landlord and Tenant Questions and Answers

21 April 2020

Do I have to agree to a request from the tenant for a rent holiday?

No but for the next few months you cannot forfeit for non-payment although other remedies are available. These remedies take time and money.

Can the landlord waive rent or suspend payment?

Yes but both parties must make sure there is absolute clarity on the terms of the agreement. Is the landlord agreeing to forego rent for a specific time period or agreeing to accept a lower rent for a time period or agreeing a new payment profile. Make the terms certain so as to avoid a later argument.

When should I act?

As soon as you can.

How long should any agreement last?

This is delving into crystal ball gazing. Is normality going to resume by the end of June? Even if the lockdown is lifted the answer is probably not as, in the absence of a vaccine, social distancing requirements may well remain in place. This is likely to impact footfall and revenue. The parties need to agree reasonable time frames for an agreement and keep it under review. 3 months might be appropriate for some and 6 months or longer for others. It will be a matter of commercial judgment and agreement between the parties.

What does the agreement include?

Is it just rent or does it include service charges or other costs? It is better to clarify exactly what is included before you sign off on an agreement than fall out later over something that should have been dealt with when the agreement is reached.

What are the rent options?

These include:

  • Changing payment dates to a monthly basis rather than quarterly
  • Convert rent to a turnover basis for a period
  • Reduce the rent for a period
  • Defer rent payments
  • Mix and match rent reductions and deferral of payment

In these unprecedented times it is important for both parties to remember their objectives: tenants usually want to be able to continue to operate a business for the long term and landlords want a rental stream in the long term. It is easier to crank up a business than to start a new one. Commercial pragmatism is the current order of the day and communication is the key.

If you want advice on the options please call Peter Bourke or Mike Ellis.

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