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Coronavirus in commercial estate agents: what action should you take?

2nd September 2020

The past five months has been a testing time on both a personal and professional level for everyone. The Covid-19, or coronavirus, pandemic has turned life as we know it upside down. A number of industry sectors have been impacted as a result, with the property market hit particularly hard. 

As the country emerges from lockdown and adjusts to its ‘new normal’, those within the commercial property sector need to change the way they do things and fulfil new responsibilities to ensure they can let, manage and occupy their commercial property or commercial property portfolio with ease.

As leading commercial property estate agents, we’ve been hard at work helping both landlords and tenants adjust to life after lockdown. Our commercial estate agency has been instrumental in assisting those with the new social and legal responsibilities that have become apparent due to Covid-19. 

Here our experienced commercial property estate agents share their knowledge about coronavirus in the commercial property sector and detail exactly what action you should take as a landlord.

The new normal for commercial landlords

Our commercial property estate agents have seen first-hand the challenges facing landlords with single and multi-let premises. The Covid-19 pandemic has seen several pieces of new legislation come to the forefront of the industry. As a landlord, it is your responsibility to ensure you comply with new and existing regulations to ensure the health and safety of your tenants comes first. 

Health and safety legislation and guidance must be followed and as rules are reviewed and updated regularly, keeping up with the latest is of the utmost importance. The property management specialists at our commercial estate agency do this on your behalf so you can deliver a great standard of service to your tenants during these challenging times.

Maintaining good landlord-tenant relationships

Many tenants will be facing difficult times due to coronavirus, but could these complications lead to the termination of a lease by ‘frustration’?

In short, your tenant should not be able to terminate a lease by frustration. As the pandemic is considered a supervening event, those with longer leases will need to meet the ‘temporary inability to occupy’ test to bring their contract to an end early. If the terms of the lease allow a contractual break however, tenants in trouble are more likely to exercise this right rather than pursue lease termination. 

The same applies to a claim for rent reduction as this relies on the premises being damaged or destroyed via an insured or uninsured risk. As coronavirus does not result in physical damage or destruction to the property, rent will not be suspended or reduced.

Despite legislation, our commercial estate agency has seen many landlords defer, reduce or suspend rent payments to maintain good landlord-tenant relationships and prevent tenant insolvency. If you do decide to do this however, all actions must be documented accurately.

Providing services to tenants

Just as tenants have to abide to their obligations, landlords must fulfil any service clauses stipulated in the contract, even in the midst of the Covid-19 pandemic. If staff or contractor sickness makes it impossible for you to deliver services to your tenants, you should not be liable for failures to fulfil these duties. 

If the terms of the lease stipulate that you should clean and keep safe common parts of your commercial property, you may have to provide deep cleaning to fulfil this obligation due to Covid-19. The costs of these extra services however may be recoverable as some leases state that the cost of supplying enhanced cleaning due to government recommendations can be recuperated as an additional cost.

When delivering any services, social distancing legislation and guidance in accordance with Coronavirus Act 2020 must be strictly followed.

The closure of your commercial building

The closure of your commercial building to members of the public may be required. Premises used for food and drink consumption, leisure and non-essential retail have been subject to closure due to restrictions, but where does that leave you and your tenants?

If you decide to close the building, this will not usually result in lease termination or rent suspension, and the tenant cannot refuse to pay rent even if they have a claim for breach of covenant. The same applies if the tenant chooses to close the building as it could still be used for other aspects of the tenant’s business. A government enforced closure without specific legislation would also not change both parties’ lease obligations but tenants may be able to claim on their insurance for business interruption.

Our commercial property estate agents are here to assist should you require further advice and support regarding the letting, management or occupation of your commercial building. Contact our commercial estate agency today to discuss your queries or concerns.