Landlords of Commercial Property (retail; industrial and offices) are also being asked to waive rents, due to loss on income by their tenants.
The same advice for residential landlords holds true for commercial; it is important you establish whether the request is genuine, or the tenant is just trying to take advantage. If nothing to do with Coronavirus, the normal situation applies – demand the rent.
If your tenant is affected by the current problems remind them there are Government schemes available to assist companies having to lay off staff due to a loss of income, and that they should be taking advantage of that.
But above all it is critical you don’t do something which might risk you ending up losing the tenant, because after three months you, the landlord, will have to pay the Business Rates.
If necessary start by offering a rent holiday, whereby they will pay no rent for 3 months, but after that the unpaid rent will be added to the following 9 months, meaning after 12 months they have paid the whole rent.
Alternatively, after further negotiation, you might extend the repayment over a longer period; or even take a reduction in rent. Or, for normal quarterly rents, offer a monthly re-payment scheme to assist with their cash flow.
Note that it is unlikely the tenant would be able to take advantage of a rent abatement clauses, such clauses usually deal with premises becoming unfit for occupation as a result of some form of damage to them, for which the landlord is insured. It is very unlikely that existing clauses in a commercial lease would be triggered as a result of the premises being uninhabitable by virtue of Covid-19.
For more information see some news from our colleagues at Woodstock.
Business Rate Relief
- All retail, leisure and hospitality companies will be exempt from business rates for a whole year. However, vets, estate agents and pawnbrokers are among high street businesses excluded.
- Small retail outfits with a rateable value less than of £15,00 will be able to claim a one off grant of £10,000
- Businesses in retail, hospitality and leisure with a rateable value of between £15,000 to £51,000 will be able to access a bigger grant of £25,000.
See also an article by our colleagues at Woodstock Property Law.