Advice for Commercial Landlords and Tenants during COVID-19

We are going through a period of extreme uncertainty for businesses, and the closure of many premises such as shops, cafes and pubs is causing particular concern for commercial landlords and tenants.

Commercial tenancies are subject to obligations from the landlord’s and tenant’s point of view. Issues may arise from the ongoing pandemic which may impact on those obligations. 

As a commercial landlord you may wonder if you can prevent the tenant from gaining access to the premises if, for example, the tenant’s employees become infected with Covid-19.  In short, the answer is no if the lease contains a covenant granting the tenant quiet enjoyment of the property. If that covenant is breached, the tenant can seek an injunction from the Court and costs from the landlord.

However a commercial landlord could still consider the creation of “reasonable regulations” for the management of the building which, for example, could include limiting access to the common parts of the building, subject to any covenant for quiet enjoyment.

Consideration should also be given to contingency plans for the continued management of the obligations under the lease and the property itself.

From the commercial tenant’s perspective, particularly if their business operates in the service or leisure sector, COVID-19 restrictions and closures will lead to a downturn in sales and profit. A reasonable question would be whether, in those circumstances, the commercial tenant needs to continue to pay rent, as the reason for the closures is not the tenant's fault. In short, the answer is yes, rent must still be paid, unless the terms of the lease provide for a rent holiday or contain a force majeure clause which excuses the parties from forming their obligations in these circumstances.

At the same time, it would be sensible for tenants to consider whether there are any other obligations, such as notifying the landlord in the event that the property is to remain unoccupied for any period of time, which they need to comply with.

In these difficult times, it  is obviously important that where possible the landlord and tenant remain on good terms and that a careful eye is kept on the changing legislation which the Government enacts.

At Samuels Solicitors we are equally experienced in advising landlords and tenants about issues surrounding leases. If you are worried about how the pandemic will affect your commercial rental agreement, we will be able to help. 

Contact us today for a free initial discussion about your leasehold issues.