Legal News | 14.04.21

Business Tenancies – ongoing leases in the COVID 19 Pandemic

Alongside the imposition of the temporary restrictions on landlord remedies to recover rent arrears or possession of business property , Government has issued a voluntary  Code of Practice for business property relationships during the Covid 19 pandemic.

The voluntary Code recognizes that every landlord and tenant relationship is different but encourages transparency and collaboration in negotiations to address unpaid rent and ongoing rent payments.

The voluntary Code includes a number of options of new arrangements that could be agreed by both parties including:

• rental variations to reduce ongoing payments;
• full or partial rent free periods for a set number of payment periods;
• removal of a tenant break right;
• extending the lease term ;
• a partial surrender of the lease premises.

The voluntary Code acknowledges that the options outlined are not exhaustive and that other arrangements might be agreed by both parties.

The parties to a landlord and tenant relationship remain legally committed to the existing terms of their arrangement including the tenant’s obligation to pay and the landlord’s right to demand 100% of rent due. Nevertheless landlords will need to consider carefully whether making no concessions at all is potentially counterproductive .

The current restrictions on landlord remedies to recover rent arrears or possession of business property are due to expire on 30 June 2021.

Government has now opened a Commercial Rents and COVID-19 Call for Evidence to which businesses are invited to respond, to make their views known on how Government should manage the withdrawal of the current restrictions, which Government recognizes cannot and should not continue indefinitely. Government is said to be particularly interested in the views of small to medium sized businesses including small commercial landlords, independent businesses and sole traders with leased premises.

The Call for Evidence can be found here: https://consult.communities.gov.uk/urban-policy/commercial-rents-and-covid-19-call-for-evidence/

If you would like to discuss any options as a business landlord or as a business tenant to modify your existing lease arrangements please get in touch with your usual contact via our contact form or email elizabeth.thompson@wansbroughs.com.