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Commercial Landlord and Tenant Guidance in light of COVID-19

View profile for Michelle Cox
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The commercial landlord and tenant sector has been hit hard with the impact of the coronavirus (COVID-19) outbreak.  As a property litigator I have been inundated with questions from both landlord and tenant clients as to how to deal with the circumstances and protect their respective positions.

The Government has issued guidance stating that tenants who are unable to pay their rent as a result of COVID-19 will be protected from forfeiture until 30 June 2020 (and of course this date may be extended).  It is important to note that this protection does not give tenants the right to suspend rent or other payments, it merely delays the landlord's right to forfeit the lease for non-payment until the moratorium ends.  Also, landlords will not compromise their right to forfeit by entering into discussions regarding late or reduced rent payments.

The Government released the guidance two days before the usual March quarter day, meaning many tenants took the decision not to pay the quarter rent, regardless of their circumstances.   Perhaps a little forethought from the Government might have meant that only those genuinely unable to pay the rent on 25 March would have needed the protection and those larger, corporate tenants would have paid up – particularly where they have private landlords. 

Some tenants will take the Government's guidance as an opportunity not to pay the rent due, given that no action can be taken at this time. It seems that this protection for tenants 'who cannot pay the rent' is and will, in some instances, be taken advantage of.

However, it is important to note that any unpaid rent will be required to be paid at a later date and the current restrictions are only in place until the 30 June.  This is not a rent reduction, but simply a deferment until business resumes.   It is therefore necessary for landlords and tenants to very carefully consider the impact of COVID-19, the landlord and tenant relationship and the Government's guidance before determining their course of action.  

My advice at this time is to keep communications open and to work together with your landlord/tenant to review matters as the situation progresses, particularly as the current deadline is a temporary one which may be extended.

If you are a commercial landlord or tenant and wish to discuss the current issues, please contact our team for more information.

Michelle Cox

Michelle.Cox@Chattertons.com

01780 750663

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