Coronavirus: How will it affect commercial properties?
It is widely known that the coronavirus lockdown will impact all aspects of the property industry, including the commercial side.
Landlords and tenants appear to have been hit equally as hard throughout the pandemic and there is still a high level of uncertainty of what might happen even when social distancing restrictions are eased.
As the situation develops, tenants of commercial properties are finding new ways to operate their businesses.
Many of our commercial clients have decided to offer takeaway and delivery services in a bid to overcome financial roadblocks.
With a potential recession looming it may be difficult for landlords to find a new tenant should the existing tenant go out of business or end the lease due to non-payment of rent.
What options do landlords and tenants have during Covid-19?
It’s never been more important for the landlord and tenant to work together if their business relationship is to continue amidst the pandemic.
Shawn Wood, a solicitor at Watermans Legal, advised: “I am aware of some landlords reducing or suspending the rent during this period which is a massive help to their tenants.
“Some landlords have agreed to defer rental payments over the duration of the lease.
“From a tenant’s point of view, there are various government grants and schemes available to businesses which is a lifeline to businesses across the country.
“I have been speaking to many clients who are tenants and they’ve successfully received the relevant funding to assist them.
“From a landlord’s point of view, if the property is mortgaged, they can apply for a mortgage holiday from their lender.”
Landlords may need to consider managing their expectations on the level of rent they can expect achieve on a commercial property going forward.
A rent decrease will assist tenants and businesses and it may also allow the lease to continue which provides clarity to both parties.
Shawn added: “With a potential recession looming it may be difficult for landlords to find a new tenant should the existing tenant go out of business or end the lease due to non-payment of rent.”
What help is available out there for tenants?
The Coronavirus (Scotland) Act 2020 helps tenants and businesses. Under a lease, landlords may only need to give 14 days’ notice to the tenant to terminate the lease due to non-payment of rent.
This new Act increases the notice period to 14 weeks. However, it should be noted that the landlord and tenant have entered into a legally binding contract and both are still liable for their obligations under the lease.
Our team at Watermans Legal have been helping our clients to buy, sell and grow their businesses for more than 25 years. We can help offer legal advice on commercial leases during the coronavirus outbreak. Contact us today to find out more.
Posted by Lisa Boyle