BLM'S COMMERCIAL PROPERTY TEAM WARNS RETAIL OPERATORS TO ACT NOW ON COVID-19 TO SECURE A PAYMENT HOLIDAY OR RENTS WILL REMAIN DUE ON WEDNESDAY 25 MARCH
BLM'S COMMERCIAL PROPERTY TEAM WARNS RETAIL OPERATORS TO ACT NOW ON COVID-19. NEGOTIATE NOW TO SECURE A PAYMENT HOLIDAY OR RENTS REMAIN DUE ON WEDNESDAY 25TH
Covid-19 Government Guidance
As anticipated the government has now announced compulsory closures to pubs, restaurants and cafes to attempt to limit the spread of Covid-19 or Coronavirus. In response a number of retailers have also elected to close their stores.
Whilst the government had already announced a suspension of business rates for some business, and has since announced measures to assist with staff wages, there is still the pressing issue of rent, which for the majority of tenants mean that the next quarters rent is due to be paid on 25 March.
Unless there is something specific in the lease that allows for a rent to be suspended in these circumstances, which is highly unlikely, this means that tenants will have to pay the next three months rent in advance in circumstances where they have either been forced to close or are likely to see a significant decrease in footfall.
What retail operators are doing as a result of Covid-19
In response to the threat, some retail operators have approached their landlords for a rent ‘holiday’ and unless one is agreed from a legal perspective:
Commercial tenants such as retail operators cannot refuse to pay rent in the current circumstances, or offer to pay a reduced amount, or to pay weekly or monthly without the agreement of the landlord.
What happens if retail operators refuse to pay their commercial rents ?
These options are available to the landlord:
- Landlord can forfeit and bring lease to an end
- Can follow the Commercial Rent Arrears Recovery procedure and seize goods
- Court proceedings
- Insolvency proceedings
- Pursue the guarantor or former tenant if the lease was assigned
- Draw down on rent deposit
Each of these options will have implications not only for the tenant but also for the landlord.
What can retail operators do immediately to protect themselves on rent issues arising from Covid-19?
BLM’s commercial property team recommends that commercial landlords and tenants engage as soon as possible this side of 25 March.
BLM can facilitate these conversations or act on your behalf. Contact our team for a confidential discussion.