certainty going forward and are keen to agree a new lease term.”
Michael says: “We have recently seen leases being discussed which provide for a rent review after 12 months, when hopefully the position will be clearer. This can give both the landlord and the tenant the benefit of certainty of the continuation of the lease, while not committing to an unrealistic rent.
“Protecting the interests of both parties is the key to reaching an agreement that can last into the future and a pragmatic approach is required. Landlords and tenants now, more than ever, need to work together.”
Acutely aware of the crisis, the government has acted. That includes introducing the Coronavirus Act 2020, which came into force in March and means commercial landlords are precluded from forfeiting commercial leases and evicting tenants for non-payment of rent. The measure was in place until June but may well be extended.
Eleanor Longworth, associate solicitor at WHN Solicitors, which has offices across the county, says: “The clear government objective is to assist tenants and ease the financial burden in the hope that they will survive the crisis and continue to trade when the restrictions are lifted.”
However, there is concern about the predicament of commercial landlords who rely on rental income stream to stay in business.
She adds: “Landlords may be left with a significant gap in cash flow, with insurance premiums and contractors still to be paid. Government initiatives to date have been
tenant focused, with little being done to help landlords who may themselves be under significant financial strain.
“Although ministers have urged banks and investors to consider ways to address these issues, many landlords will be at the mercy of their lenders. We hope the banks too will adopt a cooperative approach in order to ease this enormous burden.”
Hayley Bamber, associate solicitor and property litigation specialist at Lancashire law firm Harrison Drury, says landlords should look at the “bigger picture” when re-negotiating leases and collecting rent arrears.
She says: “The Coronavirus Act has prevented landlords seeking forfeiture of the lease for non-payment of rent. Some tenants have also benefited from agreed rent deferrals, rent holidays and relief on business rates.
“New legal protections are being considered, but we’re entering a critical period for landlord and tenant relationships as some of this support comes to an end.
“Landlords absolutely need to keep the money coming in, but if they are aggressive in demanding rent, they potently risk the tenant becoming insolvent. In what’s likely to be a tough market, do they really want to risk having empty properties?”
Hayley believes both tenants and landlords need to take control of the situation early to avoid issues. “This is going to come down to trust and understanding,” she says. “It’s about finding a mutually beneficial way to move forward.”
GIVING SOME CLARITY
High street businesses and landlords are set to benefit from a new code of practice, which the government says will provide them with “clarity and reassurance” over rent payments.
A working group was set up in early June to develop a code which encourages “fair and transparent discussions” between landlords and tenants over rental payments during the coronavirus pandemic.
The government says it will also give guidance on rent arrear payments and treatment of sub- letter and suppliers.
Communities secretary Robert Jenrick said: “We are giving clarity to landlords and tenants who are both facing equal pressures on their finances, so they are all able to stabilise their finances and bounce back.”
Melanie Leech, chief executive of the British Property Federation, said: “Coronavirus is placing an unprecedented strain on property owners and the businesses who occupy their buildings, and we need a united approach in response.
“The majority of property owners and tenants are already working well together, effectively engaging and agreeing sustainable plans, and we welcome the opportunity to work with government and others to codify this good practice.
“Fair collaboration among lenders, property owners and tenants is vital to the UK’s recovery and it will ensure that viable businesses in distress as a result of coronavirus are supported, to protect both people’s jobs and the local authorities, savers and pensioners who own the majority of our town centres.”
A BIRD’S EYE VIEW OF COMMERCIAL PROPERTY
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