Commercial Leases and COVID-19

The current outbreak has caused substantial problems for businesses in terms of how they carry on trading. Depending upon the sector in which they operate there have been a variety of announcements regarding Government support. For example, the Government has announced cash grants for the retail, hospitality and leisure sector. Under this scheme there are cash grants of up to £25,000 per property.

Under the Small Business Grant Fund (SBGF) all businesses in England in receipt of Small Business Rates Relief (SBRR) and Rural Rates Relief (RRR) in the business rates system will be eligible for a payment of £10,000.

For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

Properties covered include properties being used primarily as shops, restaurants, cafes, drinking establishments, cinemas, live music venues, for assembly and leisure and as hotels, guest and boarding premises and self-catering accommodation.

The Government has also announced that there will be an ‘Expanded Retail Discount’ business rates scheme which will provide a 100% discount for the year 2020/21 for eligible properties. Businesses need to take no action and Local Authorities will send a revised bill but if you consider yourself eligible for this relief, and have not heard from your Local Authority, you should contact them. This scheme applies to the majority of properties that have had to close as a result of the current outbreak.

Coronavirus Act 2020, Section 82

This act has some components that will be of interest to tenants.

(1) A right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent may not be enforced, by action or otherwise, during the relevant period.

(2) During the relevant period, no conduct by or on behalf of a landlord, other than giving an express waiver in writing, is to be regarded as waiving a right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent.

In effect the government has announced that commercial tenants who are unable to make rent payments as a result of the coronavirus outbreak will be protected from eviction. This protection will cover England, Wales and Northern Ireland and last until 30th June, with an option for the government to extend this period if needed.

Suspension clauses in leases and lease renewals

Some commercial leases allow tenants the option to seek a suspension of rent payments. Not all leases are the same and the clauses dealing with any suspension and the circumstances surrounding these vary.

For other businesses their current lease may be coming to an end, or indeed business owners may feel that they have to seek a change to the existing agreement.

Many landlords will be willing to reconsider the terms of a lease or be helpful in agreeing new provisions in any new lease. Business owners however, need to take considerable care when agreeing to revised or new terms in a commercial lease and they should always seek legal advice.

Any business owners looking to vary or renew their lease can benefit from support from one of property specialists for an initial fixed fee discussion of £250.

For more information contact Harshinder Hundal. E: harshinder.hundal@pictons.co.uk

or T:01582 870814