DATED: 22 APRIL 2020
In the final one of a four part series, Commercial Propert expert, Amy Husk looks at issues arising from a commercial lease which may affect both landlords and tenants during the COVID-19 crisis.
Tenants are likely to be reflecting on what their requirements for premises will be. Important decisions will need to be made where a break date or renewal date is coming up.
If the tenant needs a ‘get out’ or is thinking of consolidating its business into fewer premises, it is worth reviewing the lease to see whether there is a break date coming up.
Serving a break notice
There is very likely to be a requirement for several months’ written notice to be given to the landlord for the break to be exercised so the first step is to make sure that you have enough time left before the break date to give notice.
There may be practical points to consider in relation to serving a break notice during the COVID-19 crisis. For example:
- Whether the address for service of notices in the lease is the address where the landlord can be currently contacted given the government advice to stay at home;
- Whether the tenant is able to serve notice – illness, self isolation and potential reduction or lack of postal service may cause problems.
The best approach is to contact the landlord and ask them to confirm in writing or by email what the best address for service would be. All known addresses should be served and the notice also sent by email and fax if possible. In the event of a dispute, the court is likely to take a favourable approach where all possible methods have been used. It is best to take legal advice to make sure any break notice is validly served.
Most break clauses will be conditional on all rent being paid up to date. If the tenant is in arrears the tenant will need to rectify that before notice is served.
If a rent reduction or suspension has been agreed with the landlord due to difficulties during the crisis t is important that the agreement clearly sets out the impact on any break clause where either the break date or date for serving notice falls within the period of the reduction / suspension.
Business tenants with security of tenure (i.e. a ‘renewable’ or ‘protected’ lease) will be entitled to remain at the property after then end of the lease term. However, tenants must remember that if a notice is received from the landlord action must be taken to make sure the tenant does not lose that protection. If the property is closed, make sure the post is being collected.
It is worth bearing in mind that the Coronavirus Act 2020 states that any delay or failure to pay rent due during the period from 25 March 2020 to 30 June 2020 (or any extended date) is not to be taken into account as one of the grounds on which the landlord can refuse to offer a renewal.
Business tenants with an ‘excluded’ lease (i.e. one without statutory protection) must remember to have discussions with the landlord and agree terms for a new lease if they wish to stay on as they will have little protection beyond the end of the lease term.
For further information on this and other commercial propety issues you may be facing please contact a member of our Commercial Property team who will be able to advise you from both a landlord and tenant perspective.
To find out more about other issues concerning a commercial lease during the COVID-19 crisis, read more at:
- Part 1: Rent - what to do if the tenant cannot pay and information on Rent Deposits.
- Part 2: Rent Review
- Part 3: Forfeiture - what happens if your commercial tenant stops paying the rent
Before relying on this commentary please read the Reliance on information posted section in our Terms of Website Use in our Legal section. Please note that specialist advice should be taken in relation to any specific queries and the information above is provided for general information purposes only.