As a commercial tenant can you withhold or reduce your rent due to the coronavirus pandemic? - Richmond Solicitors In Mortlake, Barnes. Family Law

    As a commercial tenant can you withhold or reduce your rent due to the coronavirus pandemic?

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    Many landlords and tenants of commercial property have not resolved issues of rent arising from 25 March quarter day. This occurred only 2 days before the Covid-19 lockdown started in the UK. If you are a tenant, I strongly advise you to enter negotiations with the landlord as it may be possible to negotiate a concession or even a rent holiday.

    A landlord has more to benefit by delaying as interest will often accrue on outstanding rent after a limited time and more importantly, they have a whole raft of legal remedies they are able to use against a tenant that defaults in paying the rent. English law is heavily weighted in favour of landlords. Of course, if the tenant goes into administration or liquidation or similar then the landlord will lose out.

    The tenant should seek to persuade a landlord that they are in dire financial straits to help negotiate a reduction in the rent or non-payment of rent until say the pandemic is over and business can resume.

    If the tenant is not able to use its premises because of government order, then it has a better chance of success in negotiating suspension of rent or agreeing a substantial reduction. Much could depend on the wording of the commercial lease and the clause to do with abatement of rent which normally applies to impossibility of use due to physical factors. e.g. flood/fire etc.
    If you are a tenant, you should consult your business interruption policy.

    Many household names, such as Debenhams and New Look, have already requested rent holidays and some landlords, such as Argent and Howard de Walden, have already offered them in appropriate circumstances. However, their terms must be clearly identified; “holiday” is an ambiguous term – does it mean a rent waiver, so that the tenant is released from that rent forever, or a rent deferment, where a repayment programme will be put in place when times improve?

    It’s a wise policy to consult a lawyer experienced with commercial property and able to negotiate on your behalf and agree revised terms.
    Such terms can be clear and carefully documented, preferably by a property lawyer or experienced Commercial Mediator, such as myself.
    Give me a call on 0203 935 9490 or send me an email richard@mortlakelaw.co.uk

    Richard Buxton LLB
    Lawyer/Accredited Mediator

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