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The coronavirus pandemic brings far-reaching issues for business owners. They need to be considerate of the health and wellbeing of their staff, try to still operate their business if they can and also need to give thought to their financial security.

 

Many businesses in the leisure and retail sector have been forced to close their doors and others have had to make the difficult decision to close up shop for the time being to protect their staff and comply with social distances guidance.

 

I am unable to open my business, will I still need to pay my rent?

 

If you have decided to close your business doors during the covid-19 pandemic you may be wondering whether you still need to pay your commercial landlord rent. Of course, it would be ideal to save money at this challenging time, but unfortunately your landlord will expect you to still continue with your rent.

 

Firstly, consider the exact reason that you are unable to operate – is it your own decision? Is it lack of staff? Is the decision out of your hands? Or has your landlord closed part of your premises?

 

We would then suggest taking a good read through of your business lease and contracts to see if you have any provisions in place in the event for such events. It is unusual for commercial leases to have such clauses, but it is worth confirming before getting stressed.

 

Also check your business insurance documents to see if your insurance includes ‘business interruption’ and is able to cover you for your rental commitments during this period where you are unable to operate.

 

I cannot afford to pay my business rent, what can I do?

 

Many businesses will be feeling the pinch during this difficult time. Particularly for smaller businesses or those that are already under financial pressures or experiencing cashflow issues.

 

If you will struggle to pay your commercial landlord over the coming weeks or months then it may be worth considering applying for some help. If you are in the leisure, retail and hospitality sector then the Government has introduced a cash grant for up to £25,000. If you employ staff there is also the Coronavirus Worker Retention Scheme where your staff can be paid 80% of their wages from Government funds.

 

Speak to your landlord and apply to their goodwill. Everyone is feeling the stress and overwhelming uncertainty that the coivid-19 virus has brought to the UK and they may be able to help you during this time in order to keep you has a tenant. Whether they are able to be generous enough to offer you some free rental months, or offer you a rate holiday or discount will depend on their own position and munificence.

 

What happens if my Landlord cannot help me?

 

It is very difficult to remain positive about your business if you find yourself not getting any compassion from your commercial landlord, but you must remember that they may be going through their own challenges during this pandemic.

 

The Government is keen to support businesses and has introduced a grant of up to £10,000 for qualifying small businesses. Not as generous as the funding available for the retail, hospitality and leisure who have been hit the hardest, but may tide you over and cover expenses that you are struggling to pay.

 

You are protected from being evicted at this point. However you should try to remain on good terms with your commercial landlord and reach a mutual agreement.

 

If you need additional support, speak to your business bank manager, accountant or other advisors that you rely and trust in to give you guidance during this time.

 

Keep reading for tips on how to negotiate with your Landlord…

 

Tips for Negotiating your Rent

 

It can be a daunting conversation to have with your commercial landlord. Our commercial property lawyers share some tips on how to handle the dialogue.

 

Tenants are likely to be in weaker position to negotiate their rent, so it is important to be prepared and have some ideas on what you would like to happen going forward.

 
  • Plan what you are going to say in advance.
  • Time your conversation right. If you are going to make a phone call, make sure you have some notes in front of you and are free from distractions. Ask your landlord when is a good time for them to have a talk and give yourself plenty of time so you are not rushed.
  • Put it in writing – it can sometimes be easier to express in written word rather than over the phone.
  • Prepare yourself with financial information. Look at how much rent you have paid over the years, what you expect your business income to be, how long you expect your doors to be closed for (if it is possible to guesstimate at this point) and what funds your business has in reserve.
  • Be honest, tell them truthfully what your struggles and concerns are.
  • Remember that they are human too. Appeal to their good nature.
  • Remind them of what a good tenant you have been. Have you always paid your rent on time? Have you kept the property in excellent condition or made improvements out of your own pocket? Have you always complied with their terms and harboured a good working relationship?
  • Remember that they will not want to be losing commercial tenants at this time, a reduced rate or paused rate would be better than no rent at all. Give them some reassurance about how your business plans to bounce back from this crisis.
  • Be prepared to negotiate and be flexible. Listen to their concerns and you may be able to find a mutual understanding or meet in middle ground.
  • Try not to lose your temper or let your emotions get the better of you. This will not help with negotiating your business rent.
  • Come up with some suggestions to give to your landlord. Many people in business want people to come to them with solutions rather than problems.
 

Here to Help Small Business Owners

 

If you have questions about your commercial property commitments, rent or entitlements then please speak to our Commercial Property Lawyers who will be happy to help guide you on your next steps.

 

Please get in touch on 01256 844888 or email enquiries@lambbrooks.com

 

Our legal teams are working remotely and safely at this time in order to continue to offer a high level of legal advice, support and leadership.

 

Other articles you may be interested in reading:

Remaining Positive During the Covid-19 Pandemic

Recovering Debt in Crucial Times

Coronavirus Government Job Retention Scheme

 

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice.  The law may have changed since this article was published.   Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.