Although not universal, many leases of commercial premises provide for the rent to be paid ‘quarterly in advance on the usual quarter days’. The ‘quarter days’ fall on 25 March, 24 June, 29 September and 25 December.
Today marks the first quarter date of 2020 and understandably a substantial number of tenants will be concerned with their ability to make their rent payment, in the light of the Government’s requirement for businesses, shops and restaurants to close their doors to the public in the face of the Covid-19 pandemic. Whilst many businesses are set up for, or have had to quickly adapt to, home working, this isn’t practical for many businesses whose income stream will start to dry up.
The Government is introducing emergency legislation which imposes a moratorium for at least three months on landlords of both commercial and residential premises seeking possession of their premises for reason of unpaid rent. However, the rent is still due, and once the moratorium is lifted, landlords will be entitled to exercise their rights under the lease in the face of arrears.
We are already advising commercial tenants on ways to break a lease in order to mitigate their loss as a consequence of the current crisis. In this period of uncertainty for both landlords and tenants, it might be commercially sensible for the parties to discuss and agree terms that would be mutually acceptable. There is no benefit to a landlord if the tenant goes bust. It is also worth bearing in mind that when the crisis is over and the tenant is looking to re-establish trading, the landlord will not have the worry of finding a new tenant.
Should you need legal advice at this time, please contact us.