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Covid-19 – The Impact on Commercial Property

Covid-19 – The Impact on Commercial Property
April 8, 2020 Helen Washington

Businessman checking a contractOur commercial property solicitors have been receiving questions from landlords and tenants about how to deal with these unprecedented circumstances and prepare for adverse outcomes. The situation is rapidly changing and we have used the government guidance to answer some of the more frequent questions:

Question: What steps should a landlord or tenant take in the event of lockdown?
Answer: Following the statement by the Prime Minister on 23 March 2020, a general lockdown is government policy for non-essential businesses, however this may change in the near future. It is advisable that the landlords and tenants take legal advice regarding the impact and process of closing from our commercial property department, particularly the consequences for the breach of the terms of the lease for example opening hours, and right of access.

Question: What should landlords and tenants do if the property has been affected by COVID-19?
Answer: The landlords and tenants will need to work together to agree steps to be taken regarding the cleaning of the property. Our legal professionals will be able to review the lease and advise on the specific obligations of landlords and tenants under the lease.

Question: Can an existing lease be terminated by either party due to the impact of COVID-19?
Answer: The landlords and tenants will need to refer to the express terms of the lease to check if the present circumstances are/ would to be covered. It is advisable that the landlords and tenants should seek professional advice on force majeure, contractual performance and frustration. Our commercial property team can assist by looking at these provisions and advising on specific requirements in your lease.

Question: Will a tenant stop paying the rent due to COVID-19?
Answer: Based on the government guidance on 23rd March the commercial tenants who cannot pay rent because of COVID-19 will be protected from eviction. It is advisable that the landlords and tenants start communicating with each other about the cash flow and the rental payments as soon as possible to find an amicable solution. The government has advised that no business can be forced out of commercial property until at least 30 June 2020, even if they miss the rent payment.

Question: What should the landlord and the tenant consider when granting or taking a new lease in the current circumstances?
Answer: The landlord and the tenant must take the legal advice on COVID-19 to make sure that both parties understand the importance of the contractual protection and implications of the obligations under the lease.

Our Commercial Property team at Enoch Evans LLP will be happy to help tenants and landlords with any enquiries regarding leases or any other commercial property query.

Helen Washington, Commercial Property Solicitor, Enoch Evans LLPTo discuss any of the issues raised, please contact us on 01922 720 333. Or email one of our Commercial Property specialists; Anita Patel: ap@enoch-evans.co.uk, Parminder Rai: pkr@enoch-evans.co.uk or Helen Washington: hw@enoch-evans.co.uk