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Commercial landlords and tenants: what do we do once the lockdown ends?

View profile for Denise Bull
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Commercial landlords and tenants: what do we do once the lockdown ends?

With the government confirming today (16th April) that the lockdown restrictions will continue for at least another three weeks, it is still uncertain as to when and how this situation will be resolved.

For most properties, the exact solution will be unclear and my advice (as always) is to maintain a good dialogue between the landlord and tenant. If one or other party decides to play hard ball, it is unlikely to end well for anyone. A bit of compromise and flexibility is more likely to end with a good result.

Tenants; ask only for what you need. Landlords; be prepared to be flexible.

As we are now seeing, stopping the flow of money in the economy has an immediate negative effect. Managing to have this flowing again can have just as immediate an effect even if the flow is, by necessity, reduced.

As we look ahead to a time when lockdown restrictions may begin to be lifted, here’s my thoughts on some common questions and concerns me and my team have come across:

Q: I no longer need the amount of space in my building. What are my options?

As people get used to working from home, it is likely this will become more common. If you have rented too much space, what can you do?

If your lease contains a break clause, it is worth considering exercising it. Remember to check the terms of the break, including any conditions that must be satisfied and also how the notice must be served. Many break clauses are defeated by incorrect service or failure to satisfy conditions.

Q: I don’t have a break clause, what can I do?

Rather than see you go bust, your landlord may be willing to accept a surrender of all, or part of, your lease. This would be on negotiated terms and would be entirely dependent on the relative positions of the parties.

There are firms who specialise in helping tenants (and landlords) to broker deals like this, when the original purpose behind the lease is no longer applicable. For a landlord, it might be better to have a re-geared lease with a solvent tenant that face long void periods.

Q: My tenant has gone bust and I have an empty building. What can I do?

Unfortunately, many landlords will find themselves in this position. If that is the case, and it is unlikely that you will be able to attract a new tenant for the existing use, then you might want to think about re-purposing the building by using permitted development rights or by thinking about what other uses might be permitted.

Speak to your local planning office to see if they have any suggestions. Commercial agents will come into their own in trying to find innovative ways of using existing commercial buildings.

Conclusion

When we emerge from this situation, it is absolutely certain that things will have changed. I am sure that those who come out best will be those who have the ability to think flexibly and behave in a compromising way. In an uncertain future it really is good to talk and work together.


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