COVID-19: Lease Considerations for Business Tenants and Commercial Landlords

Most leases do not allow the tenant to withhold rent regardless of the circumstances and in a normal situation unilaterally withholding the payment of rent could result in a forfeiture claim by the landlord. 

However, the UK Government’s Coronavirus Act 2020 (which recently received Royal Assent) includes provisions to protect a commercial tenant from being evicted from their property for missing a rent payment in the next three months. Moreover, from 25th March 2020, s.82 of the Act provides that a right of re-entry or forfeiture, under a “relevant business tenancy”, for non-payment of rent may not be enforced, by action or otherwise, during the “relevant period”.  

Whilst this adds certainty and relief for commercial tenants, this could place landlords in a difficult situation. 

Practical Steps:

In the meantime, we would encourage all landlords and tenants to open a dialogue with each other and work together in these difficult times. Having an open dialogue and coming to a mutually agreeable position may well be better for the landlord and tenant relationship in the long run. This might include:

• Considering a reduction or waiver of rent for a short period of time;
• Reviewing insurance policies to see whether loss of rent or business interruption losses will be recoverable.

We can review your lease to see if there are any obligations/ provisions that may assist you.

If you need specialist advice, guidance or support from our team of legal experts, please email property@loosemores.co.uk or call us on 02920 224433.

Please contact James Pearn, Partner and Head of Property at Loosemores to find out more.