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Managing Rental Commitments During COVID 19 Outbreak

We are currently living in unprecedented circumstances. The economic impact of the Covid 19 outbreak is being felt very deeply and for many businesses cash flow has come to a sudden and abrupt stop. For tenants and landlords alike, the current situation brings stresses and concerns. Both parties will want to weather this storm by protecting their assets and investments. In our experience this is best achieved with a fair and balanced approach.

Landlords enter into a commercial property investment in order to make a return. Part of the risk assessment when considering an investment is the economic stability of the tenant which directly influences their ability to pay the rent.

In the current climate many tenant’s ability to pay the rent has been dramatically and suddenly reduced in a manner over which they have no control. Thankfully the government acted quickly and has put in place support mechanisms for businesses to help them see out this period and when the time is right hopefully reopen their business. These supports are a huge relief to many business owners and will go some way to assisting them in safeguarding their operations, particularly with regard to retaining staff however their day to day earnings are still severely interrupted. The supports announced range from waivers on commercial rates, grant aid, a loan guarantee scheme and supports for businesses who have tax liabilities.

Commercial leases usually include clauses around late payments, penalties for non-payment etc. In an unprecedented economic emergency situation however, it is important that landlords focus on being fair but still bearing in mind they need to protect their asset. They too will have financial commitments such as mortgage repayments.

The best way forward is for tenants and landlords discuss a fair and balanced approach that protects both parties as far as is possible.  Experienced property professionals have a deep understanding of commercial leases and business generally. They can take neutral stance to provide assistance to both landlord and tenants to reach an agreeable commitment that benefits both sides so when normality returns the relationship forged can continue.

If you need advice on commercial property management or landlord and tenant negotiations during this time contact us and we can help you find a way forward.

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