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COVID-19 Advice for Corporate Occupiers

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The coronavirus crisis has presented numerous challenges for businesses in the UK. Across the business we have been talking to our clients and network to understand the challenges that many are facing.  We have built a library of useful guidance and insights on a dedicated COVID-19 section of our website and are regularly sharing insights via our Twitter and LinkedIn account.   

Commercial tenants - whether occupying offices, retail premises, manufacturing space or other property - face a variety of challenges and our Real Estate experts have produced some guidance on some of the key issues you may face:

My business cannot afford to pay rent...

The measures aimed at slowing the virus, have meant that many commercial tenants have been required to close their premises, often effectively shutting down the business and causing cash flow issues.

This has put considerable pressure on business occupiers of leasehold premises and given them concerns over paying their rent, but what are the options available?

The introduction of the Coronavirus Act 2020 provides a moratorium on the forfeiture of business tenancies for three months. As landlords cannot terminate a business tenancy on the grounds of non-payment of rent until June 2020, this has sparked discussions between landlords and their tenants around finding a workable solution for both parties.

Sarah Cameron, Associate in our Real Estate team provides insight into the solutions some of our clients are exploring in her latest blog: Coronavirus - What has happened since the March quarter rent day.

Are there any enforcement options that the landlord could take?

Following the introduction of the Coronavirus Act 2020 and the proposed Corporate Insolvency and Governance Bill, the government is continuing to introduce legislation in response to the coronavirus outbreak.

The Taking Control of Goods and Certification of Enforcement Agents Regulations 2020 were laid before Parliament on 24 April 2020 restricting, in certain circumstances, how enforcement can take place at both residential and commercial properties during the coronavirus pandemic.

Philip Feather, Associate in our Real Estate team provides further information on the enforcement options for landlords in this blog: Coronavirus – Landlord’s enforcement options at commercial and residential premises.

Can we exercise our break clause?

The coronavirus crisis is forecast to cause a period of economic downturn. During such periods, many tenants and landlords seek to exercise break clauses. Landlord’s may wish to exercise a break clause to remove a non-paying tenant (especially in light of the recent moratorium on forfeiture, discussed in our article) and a tenant may wish to exercise a break clause to free themselves from the obligation to pay future rent.

In anticipation of an increase in the exercise of break clauses, Sophie Morley, Legal Director in our Real Estate team has set out a note on the basics of break clauses and the effects coronavirus may have: Coronavirus– Break clauses in commercial leases.

What are the legal options if we want to reduce our office space?

The COVID-19 crisis has caused employers to review their office environments and could force both swift and permanent changes to how we work. The financial impact on businesses, combined with increased remote working and the social distancing that will continue for some time, have left many businesses questioning the type and size of premises they really need or can afford. As a result of this, there’s likely be a shift of employers looking to downsize their leases or looking for flexible office space rather than long-term leases, but what are the legal options for tenants looking to reduce their space?

Sophie Morley, Legal Director in our Real Estate team has explored the future of the traditional office and the options available for tenants in her latest blog: Coronavirus – The end of the traditional office? 

If you would like to discuss any of the issues in this article, please contact Sophie Morley.

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.