BUSINESS LEASE RENEWAL CONSIDERATIONS IN THE IMMEDIATE AFTERMATH OF THE COVID-19 LOCKDOWN

scomo social share image

In the context of a business lease renewal there are quite a number of new factors which both landlords and tenants of commercial property need to consider in the immediate aftermath of the COVID-19 lockdown. That is particularly so in circumstances where the tenant’s business is in leisure, hospitality, retail, or some other business which hasn’t been able to carry on in lockdown and no benefit whatsoever has been derived by the tenant from its leased premises. Rent during this period may well not have been paid and cash strapped tenants may have negotiated for rent suspension, or waiver. Fortunate indeed is the tenant which finds it has a business interruption insurance policy, such as that apparently issued by Hiscox, which seems to cover the risk which has “come home to roost” here.

Landlords finding rent arrears which have built up in these particular circumstances, if not beforehand, have to wrestle with the restrictions introduced under The Coronavirus Act 2020 (‘CVA 2020’) and regulations taking effect pursuant to it. Landlords are prevented from taking immediate action to forfeit a lease and secure recovery of possession of premises for tenant breach.

However. quite properly here, and to be ‘thrown into the mix’ for both landlords and tenants, is the new Code of Practice for commercial property relationships during the COVID-19 pandemic published by government on the 19th June 2020. The Code, as it stands, is not legally binding in any way, but clearly if commercial landlords in general took, in the government’s opinion, an insensitive and unnecessarily hard line with tenants in the current circumstances immense damage could be caused to the British economy. Many viable businesses, which might otherwise have been able to survive in the medium to long term could be put into administration. Such an unfolding scenario wouldn't be in a landlord’s longer term commercial interests, with the likelihood of commercial property possibly then lying empty for many years to come.

So in the business lease renewal context the COVID-19 pandemic leaves much for both landlords and tenants to consider and discuss together. There is a clear need and opportunity, in the writer’s view,  for landlord’s and tenant’s to rethink how commercial leases might now need to be structured/re-balanced in some way which recognises the new ‘world’ in which many businesses (e.g. retail) can continue to operate online even when shops are closed. That, of course, would have knock on consequences for property development financing and investment. Unless the insurance industry is willing to offer products which accept the risks of further lockdown in pandemic conditions one can well imagine that retailers and businesses in the hospitality and leisure sectors will be pushing (a) for an arrangement whereby, if the business can’t operate, no, or minimal rent, should be payable and (b) for rents to be more closely aligned with turnover generated from the premises, shopping/leisure centre or high street from which the tenant is able to operate.

Contact Robert Cottingham

If you would like more information on the above, please contact specialist lawyer Robert Cottingham by emailing This email address is being protected from spambots. You need JavaScript enabled to view it..

Services for You

find out more

Services for Business

find out more

Get in touch today

By submitting this form you agree to our privacy policy.

Please let us know your name.
Please let us know your email address.
Please enter a valid phone number
Please let us know your message.
Invalid Input