Covid-19 guidance for Landlords and Tenants
8th April 2020 by Mark Timberlake
Covid-19 has had a profound effect on the property market, with landlords and tenants alike under extreme pressures given the unprecedent tightening of global cashflows. This will inevitably impact upon tenants ability to make rent payments, or either party fulfilling obligations on covenants under a lease.
Please find below some advice for Landlords and Tenants in relation to Covid-19, however with events unfolding and changing on a daily basis we would highly recommend you contact our team to talk through your query so we can provide the most up to date information.
Rent
All leases will, inevitably, include provisions for the tenant to pay rent to the landlord. If the tenant fails to pay rent, then the landlord has a number of options, including forfeiting the lease and taking possession of the property, issuing county court proceedings to recover the outstanding rent, or even issuing a statutory demand as a precursor to bankruptcy or liquidation proceedings.
Force Majeure
Some leases may contain a force majeure clause – a mechanism to excuse one or both parties performance of their contractual obligations in the event that certain specified events which are beyond the control of the parties prevent the contract from being performed.
However, many leases do not contain such provisions, so it is essential to review the lease in question carefully to confirm what does and does not apply.
Government Assistance
The government is clearly concerned as to impacts if its social distancing measures, and has made several announcements which relate to leased premises, and assistance to businesses in general:
- A three month moratorium on new possession proceedings relating to disruption caused by Covid-19
- Encouraging banks to give up to three month mortgage holidays for struggling landlords
- A 12-month business rates holiday for all retail, hospitality and leisure businesses in England
- The Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
- The HMRC Time To Pay Scheme
We anticipate that further relief and assistance will be announced by the government, and any of the above measures could be extended, and we will be monitoring the situation for any updates.
Finally, bearing in mind that there is a significant possibility that both parties may be in breach of one or more of their obligations, and assuming that neither party wishes to terminate the lease, then this would be a potential opportunity to seek to negotiate a rental reduction and/or suspension.
If you are faced with any of the issues raised amid the Covid-19 then please contact our team today and we will be happy to help.
Mark Timberlake
Managing Partner — Dispute Resolution
Direct dial: 01202 377863
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“The advice Mark gave was very good value for money and the combination of strictly accurate legal advice and common sense were exactly what I needed.”
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“Mark Timberlake is an exceptional solicitor. He has a huge depth of knowledge in his speciality and looks after his clients in a very kind and patient manner. Mark is unfailingly courteous and always a pleasure to deal with. I am always confident in any matter that Mark has dealt with.”
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“We have had many years of top class professional advice and assistance in many respects of our property ownership. However great our worries initially, matters have been dealt with in a most professional manner and to our satisfaction.”
Mark qualified as a solicitor in 1989 and since then has specialised in property and landlord and tenant disputes, possession and debt recovery in relation to both commercial and residential property. He has extensive experience in relation to issues involving blocks of flats including representation in the Property Chamber and the courts. He has also dealt with many commercial disputes, professional negligence and insolvency claims.
He has frequently given talks on the law as it affects managing agents through the Association of Residential Managing Agents and other groups.
He has been recommended for many years by the Legal 500 Guide to the Legal profession which has said that Mark ‘is very highly rated by clients’, ‘explains complex issues in understandable terms’ and ‘is excellent in really difficult situations’.
Mark is married with 2 teenage children and at weekends can often be found on his boat which he sails competitively.
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