Opportunities for Landlords and Tenants in a time of crisis?
Very few people need to be reminded that the UK and the world are facing a challenge not seen in over 100 years with the threat of Covid-19. Governments are understandably treating this with a considerable degree of seriousness and are encouraging ‘social distancing’, remote working (where possible) and ‘self-isolation’-inevitably this is having a knock-on effect on many different sectors across the economy. Commercial Property is no exception.
There are, however, opportunities to be had in such uncertain times. Tenants will be looking to pay a reduced rent or no rent at all over the coming months until the economic ship is steadied. Pragmatic Landlords who are in a position to weather the storm will be only too pleased to keep tenants committed in the future when the inevitable recovery occurs. The blow can be softened further for Landlords if, in exchange for a reduced rental, the tenants sign up for an extended term. This combined with the UK government’s recently announced rates relief for certain business occupiers represents a golden opportunity for the renegotiation of commercial leases. We would of course, strongly recommend that landlords and tenants alike seek legal advice on the renegotiation of a lease and ensure that any variation is recorded by way of a ‘Deed of Variation’. From a landlord’s perspective you want to ensure that any renegotiation is properly and formally recorded to avoid any ambiguity and from a tenant’s perspective you will want a formal record to avoid a disingenuous landlord from reneging on what has been agreed.
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