KEEBLES Tenancy Agreement


Operators who lease their care home premises may be experiencing difficulty with rent payments whilst dealing with the additional challenges and costs of providing care during the pandemic.


Although rent is a priority payment, so too are the escalating costs of workforce and PPE to care for residents and to protect staff.


In usual circumstances, if a tenant defaults on payment of rent, most leases provide the landlord an opportunity to terminate by way of forfeiture if the rent remains unpaid for a certain period aſter its due date – oſten 14 or 21 days. The landlord can bring this about by peaceably re-entering the premises and changing the lock, which brings an end to the lease, so that the tenant is evicted. Although a tenant can apply to court for the lease to be reinstated, forfeiture is generally a very effective method for the landlord to deal with a defaulting tenant.


In March, the government acted to provide temporary protection for tenants resulting in landlords being unable to forfeit commercial leases until a moratorium ends. The initial moratorium ran until 30th been reviewed and extended to 30th


June 2020 and has since September this year.


The relevant provisions can be found at Section 82 of the Coronavirus Act 2020 and apply to all business tenancies. During the period of the moratorium, landlords will not be able to forfeit on the grounds of unpaid rent or any other sums due under the lease.


It is important to note that the rents will continue to accrue under the terms of the lease and there is provision that no step taken by a landlord will waive the breach for non-payment of rent, save for an express waiver in writing. Other methods to recover overdue rent are also still available to landlords.


Being unable to pay your rent is a serious situation and is one which it is best to act upon as soon as possible.


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ON THE CASE


This month in our regular feature, Charlotte Harris, Senior Associate at Keebles LLP, explores the impact on leases for care home amid the COVID-19 crisis.


Tenants across a number of sectors have approached their landlords with requests for a reduction or suspension of rent or to switch payments to a monthly basis. The temporary restrictions on enforcement are plainly intended to persuade landlords to be co-operative in responding to such requests, although there is no obligation on the landlord to act reasonably in deciding whether or not to agree.


Any temporary concession that you agree with a landlord must be properly documented and draſted. The agreement can either be documented by way of a deed of variation or a side letter. A deed of variation will permanently vary the lease, which is preferable to most tenants. Side letters are usually


During the period of the moratorium, landlords will


not be able to forfeit on the grounds of unpaid rent or any other sums due under the lease.


preferred by landlords and can be expressed to be personal to a tenant (not benefitting third parties who the lease might be assigned to) and expressed to come to an end if the tenant fails to pay the rent accordingly to the agreed concession terms.


We have seen several arrangements being agreed upon between our clients and their landlord, including: rent-free periods, agreements to accept a lower rent for a specified period, rent-free periods in exchange for an extension of the term of the lease, and rent deferral.


We strongly recommended that you obtain independent legal advice before accepting and formalising rent concession arrangements with landlords. Deals to extend the term of the lease may result in additional stamp duty land tax being payable or may need to be registered at the Land Registry.


www.keebles.com www.tomorrowscare.co.uk


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