Don’t let Covid 19 Break your plans to leave your premises!

The Corona Virus Act 2020 has provided some welcome relief to hard-pressed tenants of Commercial Property, enacting what is in effect a 3-month moratorium on landlords forfeiting a lease for non-payment of rent by the tenant. In this context, rent means all sums due under the lease.

If you are a tenant with a break option this year which you are planning to exercise, then you need to consider very carefully whether you should take advantage of the Corona Virus Act provisions, as the impact of not paying all or any of your rent could be considerable... The Act simply states if you don’t pay your rent, you can’t lose your premises until the moratorium is lifted, currently, this is hoped to be 30 June 2020. It does not say you don’t have to pay rent during the crisis.

Conversely, the vast majority of break clauses require a tenant to have paid the rent in full up to the break date, and in some cases beyond the break date up to the next following rent payment date.  Indeed, many still require compliance with other covenants in the lease.  The Corona Virus Act provides no relief here - a landlord can treat the break as not having been properly exercised if you fail to meet any of the specific conditions in your lease. Bear in mind that most leases, rent will mean and include all sums due and owing under the lease as at the intended break date, so these would include your service charge, insurance contributions and in some circumstances may even include any sums due to the landlord for works they have done to the demise that you should have done yourself.

The take-away is a simple, but essential message. Please take particular care to ensure you understand and comply with the requirements of your break clause and also when and how you are to serve notice exercising your rights.  More break rights are lost by failure to serve notice in accordance with the precise requirements of your lease than for any other reason.

But once notice is served, complying with your obligations in respect of rent payment and redelivery of the premises is no less critical.

If you have any doubts at all about achieving the effective outcome you want, please call us on 01258 459361. We are here to help. 

Blanchards Bailey

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