How Corona has Impacted the Commercial Property Market – two months on
These have been unprecedented times, anticipated recovery post-Brexit uncertainly has now been swept aside and to use nautical terminology many firms are battening down the hatches to ride out the Covid-19 storm.
The implications of coronavirus between landlords and tenants has been a frequently recurring theme over the past few weeks.
Moving or leasing new business premises might be at the bottom of the to do list for many firms this summer, but recent news that revaluation of business rates will no longer take place next year will hopefully signal calmer seas ahead and help some recovery in the commercial property market.
This weeks news about a restart in the construction industry and the building of new premises is also good news for tentative economic recovery.
Commercial Property lawyer, Paul McGladdery welcomed all the news:
“Both landlords and tenants find themselves in difficult situations in these unusual times. As many aspects of business are currently being reviewed, it makes sense to look at your arrangements for premises too. In the short term in addition to the financial assistance from the government “breathing space” delaying eviction can be obtained by tenants who need it to get back up and running. We can also advise landlords who may have tenants in this position.”
Legislation had been introduced to bring the next revaluation forward by one year from 2022 to 2021, but coronavirus and its economic impact has shifted the timeline.
“A combination of rates relief, revaluation dates shifting and business support will help many SMEs in the short term, but my clients are still worried about their economic future and so investment and the commitment of a brand new business premises for some might be way off,” added Paul.
“Some commercial landlords have been asked for assistance going forward from their tenants as cash flow particularly from retail renters has been an issue.
“Our high streets, shops, restaurants and cafes have all been shut down and the finance tap has been turned off, whilst there is no specific contractual right to allow a tenant to do this it will depend on individual landlords, but everything has a knock on effect and landlords need the revenue from tenants to operate. There has however been some relief for tenants from the Government,” said Paul.
Protecting Commercial renters
As a result of the pandemic there have been some changes to commercial property occupiers - one of which is legislative and the other procedural:
- Legislation (section 82 of the Coronavirus Act 2020) gives a statutory moratorium on landlords taking action to forfeit the leases of commercial tenants for non-payment of rent during the protected period between 25 March and 30 June.
- A new Practice Direction 51Z introduced into the Civil Procedure Rules which imposes a 90-day ban on court possession claims between 27 March and 25 June.
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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.