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rent reduction or increase

Laceys tips when considering a rent reduction during coronavirus

15th June 2020 by Rob Kelly

Categories: Covid-19
Tags: , , , , , ,

Commercial and residential tenants who miss rent payments due to the impact of the coronavirus pandemic are now protected from eviction until at least 23 August 2020.

Landlords and tenants may want to agree a change in the rent payable under a tenancy agreement, but a change which is incorrectly documented, or not documented at all, could significantly affect the parties’ rights and obligations.  This could be particularly important, for example, if there is a guarantor of the tenant’s liabilities and obligations so as to ensure that the guarantor is not relieved of their guarantee obligations.

So what factors should be taken into account in order to properly document such changes?  Among them are the following:

  1. Does the reduction in sums payable by the tenant cover rent only or does it also include service charges?
  2. Is the reduction to be a deferral (so that the full rent / service charge remains payable at a later date) or a holiday (i.e. a waiver of charges for the agreed period)?
  3. If some or all of the sums are to be waived, are they to be capable of being claimed in full by the landlord if the concession is terminated due to a breach by the tenant?
  4. Ensure the letter is personal to the tenant so that if the tenancy is assigned the letter will cease to have effect.
  5. Ensure that any rent review which occurs during the period of reduced rent will be calculated in accordance with the provisions of the tenancy and will not take account of the terms of the letter.
  6. Although the Coronavirus Act 2020 prevents a landlord recovering possession until 23 August 2020 where the ground for doing so is the non-payment of rent, are the landlord’s other options for responding to a breach of covenant to be preserved?
  7. If the tenancy provides for the payment of interest on rent / service charge paid late, is there to be a deferral or suspension of that interest?

These are just a few of the numerous issues that should be considered if a change to the obligations to pay rent or service charges are to be implemented.  Each situation should be considered in the light of the terms of the particular lease, and any letter recording the agreement should be drafted accordingly.  The parties are therefore encouraged to seek legal advice before agreeing to or implementing the terms of any such letter.

Laceys Solicitors provides specialist services in landlord and tenant law. If you would like any further advice on drafting changes to tenancy agreements, please contact Rob Kelly by email or 01202 755217 who will be happy to help.

Rob Kelly

Senior Associate — Dispute Resolution

Direct dial: 01202 377871


Rob Kelly
  • “A first choice for truly contentious Litigation in Automotive and Asset Finance and Leasing. His pure skill in tricky work wins through time and again and adds real value compared with the so called 'top tier' litigators. Truly capable, amenable and commercially minded business partners, the 'master chessmen' of their specialty.”

    Paul Maxted, previously the In house Legal Adviser and Company Secretary nearly 20 years, all Financial Services related companies in UK for Daimler, Mercedes-Benz

  • “I have had the pleasure of working with several members of the team at Laceys regularly over a period of years. I found Rob Kelly in particular, who worked on a successful litigation case for me over a period of several years to be outstanding in all aspects of the work he undertook, and the manner in which he did it. I now consider him a friend. I would not - and have not - hesitated to recommend Laceys to my family and friends, and continue to use them for all legal matters.”

    Dan Collins

  • “ I just wanted to thank you for your great work on the professional negligence case and other cases you have represented Indian Ocean and Tiien through the last few years.”

    Mehdi Vahdati, Director and Proprietor - Indian Ocean (Bournemouth) Limited

  • “I've worked with a fair few lawyers over the years and Rob Kelly is the most on the ball and efficient lawyers I've ever come across. I'm looking forward to working together for many years to come.”

    Roger Woodall, CEO - Diamond Sporting Group

Rob is an Associate Member of the Chartered Institute of Legal Executives (September 2009).  Rob also holds an LLB (Hons) degree in law.  He successfully completed training as a mediator under the ADR Chambers / Harvard Law Project Scheme and was one of the first mediators to have been appointed an IMI Certified Mediation Advocate in the UK with a commercial practice.

Rob specialises in dispute resolution through litigation, arbitration and mediation, with particular emphasis on contractual disputes, claims involving allegations of professional negligence (which he has prosecuted on behalf of commercial and private clients and defended on behalf of insurers, re-insurers and Lloyd’s syndicates). He is regularly instructed in connection with substantial disputes involving contractual, professional negligence, contentious probate issues.  Rob also deals with contentious property and landlord and tenant issues.

Rob’s style is a mix of listening, asking (tough) questions, diplomacy and reality testing. He’s interested, flexible, and pragmatic. He offers a common sense, realistic approach to assist his clients in searching for solutions to their disputes and brings straight talking and integrity to his work.

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