As the UK endures the challenges produced as a result of the spread of Coronavirus/COVID-19, JMR Solicitors continue to hear a number of enquiries from commercial landlord and tenant clients as to how this may affect their property arrangements and commitments.
With the present economic crisis, many commercial tenants who are looking to renew their lease are also seeking reviewed terms in order to put themselves in a sturdier financial position for the future.
Negotiating your commercial lease if you wish to renew
Although most commercial lease renewals are governed by the Landlord and Tenant Act 1954, there may still be opportunities to negotiate if both parties are willing.
Automatic Right to Renew a Commercial Lease
Those tenants who are covered by the Landlord and Tenant Act 1954 have an automatic right to renew their lease and must consequently oblige to a statutory notice on their landlord expressing their intention to do so. Otherwise, the landlord can also serve notice on the tenant when the term of the lease is about to finish. Regardless of who serves the notice, the tenant should be aware of the time limits placed upon them in agreeing the terms of the new lease and to ensure that they do not lose their right to renew their lease.
When notice for renewing a commercial lease has been served
Once the notice has been served that the tenant wishes to renew their lease then, the parties can then begin the negotiation route and agree on the new terms of the lease. If a tenant is a longstanding tenant and has been no hassle throughout their tenancy, they may be in a strong position to renegotiate more positive terms. This could incorporate a rent-free period or rent reduction, a recurrent break clause or even an adjusted lease term.
Some tenants might also consider requesting a Covid-19 clause, whereby, rent is reduced should the government request the public go back into lockdown.
The COVID-19 pandemic has obstructed all business and few landlords will want to have an empty property during the current market circumstances, placing tenants in a stronger position than usual.
Forfeiture of commercial leases during Covid-19
Sections 82 and 83 of the Coronavirus Act initially forced a three-month moratorium on landlords’ ability to forfeit leases of commercial property for non-payment of rent in England and Wales, and Northern Ireland, respectively. That stage has now been extended until 30 September 2020 in England and Wales under the 2020 Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) Regulations and the 2020 Business Tenancies (Extension of Protection from Forfeiture etc.) (Wales) (Coronavirus) Regulations respectively.
If you wish to renew or renegotiate your commercial property lease, it is vital that you fully understand what your options are and your legal standing. Contact JMR Solicitors Commercial property team on 0161 491 3933 or email firstname.lastname@example.org