News

TENANTS NOT PAYING RENTS BUT YOU CANNOT EVICT THEM. So, Landlords, What to do?

what to do when a tenant can't pay rent

A landlords reminder

The new Coronavirus Act 2020 (the “Act”) temporarily prevents the landlords from repossessing their own properties when their business tenants fail to pay rents during the period from 26 March 2020 until 30 September 2020 (extended by regulations from 30 June 2020). This period might be extended in future. By saying “rents”, they include any sum payable under the lease – such as principal rent, service charge, insurance rent etc.

This is a tough time for the landlords. Here is the list of what you should bear in mind:-

Do:

  • Remain calm and pragmatic and get yourself ready for any negotiation that your tenants might come up to – be it rent suspension/reduction and/or other variations of other lease terms, or early surrender;
  • Check if all rent payments are up to date, and if you suspect your tenant is struggling making payments on time, discuss with him/her and consider what you can agree in the circumstances;
  • Put all agreement in writing – if the agreement is for a temporary arrangement, then you might like to consider issuing a side letter, rather than opting for a variation of the lease;
  • Check on your property from time to time – this is important especially as there may be less people occupying the property and any physical damage or other changes might happen unnoticed. If you would like to see inside the rented property, you will usually have to give reasonable notice to the tenant (see the agreement you have with your tenant);
  • Review what services need to be provided to the property (especially if you are providing services) – such as deep cleaning, provisions of anti-viral equipment etc;
  • Check your insurance provisions and see if anything might help in the circumstances;
  • Consider payment holiday for yourself – e.g. mortgage holiday. Do check the terms and conditions carefully before entering into it;
  • Consider cost implications before making any legal action – dispute/litigation can often be costly and emotionally draining, and you should aim for an amicable resolution from the start; and
  • Act reasonably at all time.

Don’t

  • Do anything proactive to evict your tenant due to non-payment or late payment of any rents, at least for the time being;
  • Leave any agreement made only orally – write down any agreement instead (for which you should have advice prior to making such an agreement);
  • Be pressurised that you need to give your tenant any rent reduction/suspension – there is no obligation on you to reduce/suspend any rent. We all need to be reasonable and pragmatic in the circumstances.

At Cognitive Law we would be very happy to assist you on your commercial property issues. Please feel free to drop me a line at mayumi.hawkes@cognitivelaw.co.uk

Mayumi Hawkes