Negotiating Rent Commercial Property - JS Reakes
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Negotiating Rent Commercial Property

Even if it feels personal it rarely is – Negotiating rent during the Covid 19 pandemic.

This month our advice is on negotiating rent. We are further into the pandemic and feeling rather frustrated by the lack of progress and ability to return to our “normal” way of life. We hope our advice on negotiating rent during the Covid 19 pandemic will provide some clarity and assist with your present and future decision making.

With large parts of the economy unable to trade due to the Covid 19 pandemic, it is likely that further concessions in terms of rent are going to have to be negotiated with Landlords. The government have issued a code of practice for the commercial property sector  https://www.gov.uk/government/publications/code-of-practice-for-the-commercial-property-sector however, it is optional and we are aware of a number of issues where tenants and landlords are locking horns over rent arrears.

Firstly, there is no legal compulsion on landlords to reduce rents payable, but there is an ethical and business argument for doing so. In the very least landlords are seen to be deferring rent. This means that rent arrears will continue to accrue but tenants will be given a longer period of time to pay. In most cases this is by way of negotiation/agreement and will be recorded as a payment plan.

Some landlords are reducing rent and even in some cases writing rent off as a goodwill gesture to assist tenants. This needs to be recorded preferably by way of a Deed of Variation to ensure that full back rent isn’t pursued in the future.

In any of the potential cases the tenant is going to have to negotiate terms that best suit their individual situation. We would advise that following a few simple principles will ensure that the best terms can be negotiated whilst retaining a good working relationship with the landlord.

Advice for you

  1. Put everything in writing, through email or hard copy letter.
  2. When contacting a landlord:
    • Have everything you need to hand i.e. the lease, accounts, projections etc.
    • Be professional and calm
    • Even if it feels personal it rarely is
    • Offer the landlord an alternative or a way out i.e. deferred rent, reduced rent, monthly rather than quarterly etc.
    • Conclude and once again put it in writing
  3. Back it up with evidence such as a drop in turnover, lockdown dates etc.
  4. Keep everything as clear, simple, and precise as possible.

There is currently a moratorium on notices seeking possession from Landlords until 31 March 2021, so your Landlord can not take the property back. It is likely that this period will be extended. If you need any advice please let us know by emailing us office@jsreakes.co.uk

Other useful guidance can be found at https://www.gov.uk/government/publications/covid-19-and-renting-guidance-for-landlords-tenants-and-local-authorities/coronavirus-covid-19-guidance-for-landlords-and-tenants

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