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Commercial leases - protecting business through lockdown

View profile for Daniel Sturman
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Commercial leases - protecting business through lockdown

Whilst we all hope the Covid-19 pandemic is in decline and that we will not see a return to lockdown at national level, the threat of a second wave still remains. So, if your business is about to take a lease of premises or you are already in an existing lease, are you ready for the impact of that second wave, if it ever occurs?

Businesses taking a new lease during Covid-19

If your business is about to take a lease of business premises, then it is important to raise the issue of the impact of a second lockdown due to Covid, with your solicitor. 

You will need to see if the landlord will agree to a clause in the lease so that if you cannot use the premises due to a lockdown situation, then your rent and service charge is suspended until those measures are lifted. 

If you are at the early stages of negotiating heads of terms for a lease, remember to mention this point early on with your agent or surveyor. In the age of Covid, it would be a reasonable request to protect your business in case there was ever a future lockdown.

Protecting your business in your existing lease

If you are currently in a business lease arrangement, then consider perhaps asking the landlord for a formal Deed of Variation if your current lease does not include such a rent suspension clause. 

A Deed of Variation would amend the existing lease to include a formal Covid-19 rent suspension clause. The landlord would most likely ask you to pay their legal costs for this deed, but those costs should be weighed against the benefit of having such a clause in your lease and not, therefore, having to pay rent for a property that cannot be used during a lockdown period. 

Alternatively, if there were another lockdown you could approach your landlord at the time to agree the terms of a rent deferral letter. Such a letter would defer rent during that lockdown period, but the landlord is not obliged to provide this, so there is a risk there if you wait.

It is very important to be prepared for the possibility that there could be a second wave of Covid-19, resulting in another lockdown. We can assist you with the above so if you do need help, please contact me on 01245 453811 or daniel.sturman@birkettlong.co.uk.

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