Experts discuss how the pandemic has impacted landlords and occupiers of commercial property and what this means for the future of leases, in this Place North West podcast sponsored by law firm Kuits Solicitors.
David Moroney, commercial property partner at Kuits, is joined by Andrew Cooke, director of Manchester at Bruntwood Works, the developer’s offices arm, which creates and manages more than 5m sq ft of workspace across the UK.
The health crisis has caused widespread disruption across many industries, and commercial property is no different. Early in the pandemic, the Government launched various initiatives to support businesses, for example steps to prevent aggressive action being against them for failing to pay their rent.
More recently, it has published guidance on how businesses should prepare for a phased return to the workplace while minimising the health risks for employees.
But such guidance is not enshrined in law, notes Moroney, and there are other considerations for commercial landlords and tenants as the country emerges from lockdown.
Questions asked in this episode:
- Have tenants generally failed to pay rent during the pandemic, and, if so, what legal issues has this raised? What is the legal position for each party?
- To what extent are landlords and funders demonstrating flexibility with regard lease and other property agreements?
- How will the current environment impact landlord and tenant relations going forward, and what can we expect in terms of new leases? Will companies seek shorter, more flexible terms?
- How are commercial landlords working to achieve a safe reopening of office and retail property for their occupiers?
- Will there be any issues that need resolving during this transition period, such as increased service charges as offices are managed more carefully?
- The Government’s measures introduced at the start of the pandemic have gone a substantial way towards encouraging conversation and collaboration between landlords and tenants, which has reduced the potential for disputes
- However, pressure on tenants is expected to mount as the 25 June quarter date for rent payments approaches, and non-essential retail reopens from this week
- New lease agreements will introduce more flexible terms, and many leases being drawn up at the moment are already including ‘Covid’-related clauses that seek to minimise the commercial liabilities for each party
- Many companies, including Bruntwood, launched a phased office reopening earlier this week, but tighter health and safety and social distancing measures – including screens, one-way systems and extra cleaning – are crucial
- This is likely to increase property management costs for companies in the months ahead