We have compiled a list of actions, which Landlords and Tenants should be undertaking before engaging with one another during this period.
During this difficult period, two things are clear. We are all in the same situation and we need to work together. If we work together, the various options available can be discussed constructively, which would benefit both the Tenant and Landlord. By taking this approach we will be more successful in finding a suitable solution for both of the parties concerned.
Staff
- Staff are in lockdown, at home, working offsite or not working at all.
- Tenants should remain committed to their staff during this time.
- Depending on the financial position of the company, this is done by:
- Delaying the necessity to retrench or dismiss staff, as far as reasonably possible
- Offering 'short time' salary payments to avoid retrenchments
- Subtracting a portion of the lockdown period from annual leave
- Allocating unpaid leave for the duration of the lockdown period, or a portion thereof
- Assisting staff to work remotely with various IT tools, or
- Offering once-off additional leave benefits like mobile phone/internet allowances.
- Landlords should be supporting tenants who are supporting their own staff.
Cashflow
- Tenants with less staff on duty could be less productive.
- A lower demand for products and services, together with the reduced ability to generate income, negatively impacts a business' cash flow.
- Tenants should be re-assessing all business expenses and not only the rent paid for their premises. Wasted expenditure should immediately be cancelled (including excessive advertising costs, unnecessary telecommunication costs, personal drawings, travel, fuel and entertainment expenses.)
- Tenants should be engaging with all of their other creditors to arrange delayed or staggered payment terms.
- It is, however, unfair for a tenant to demand favourable rental terms, only to pay other service providers or creditors. All service providers and creditors should be treated equally.
- Landlords should be supporting a tenant who seems to be cautiously managing all of its business expenditure, not only looking to save on rental payable. A Landlord is within his/her rights to request proof thereof prior to an engagement on rental subsidies.
Business continuity
- Businesses have an underlying responsibility to ensure that they are equipped to endure challenging times and should have reserves in place to deal with unexpected emergencies.
- If there are any solutions present, which could possibly extend the business' survival during the uncertain period, the business would be foolish not to consider these options. It is not wise to dismiss these alternatives simply because of the inconvenience or effort involved.
- Tenants need to acquaint themselves with solutions currently offered by government and financial institutions. The Government has already dropped the interest rates by 1% and are also offering various benefits to SMEs over this time. Certain banks and financial institutions are offering SMEs and individuals limited repayment holidays and favourable short- term loans.
- Landlords should be supporting tenants who have investigated, considered and applied for these additional benefits, as opposed to only requiring the assistance of the landlords in this period. A Landlord is within his/her rights to request proof thereof prior to an engagement on rental subsidies.
Tenant / Landlord relations
- A tenant who is already up to date on all of their rental payments, and who pays rent on time is a precious commodity and should be seen as an asset to any property owner.
- Tenants such as these are already in a good position to have open and honest communications with their Landlords.
- Where a tenant is already in arrears, predating March 2020, such a tenant should bring these arrears up to date or make some contribution to these arrears, before insisting further assistance. Tenants like these have already had the benefit of an understanding Landlord, and an economic environment predating the COVID-19 virus. Further extensions during this time are not only unreasonable, but probably unlikely too.
- Landlords should be supporting tenants who are up to date on rentals paid, especially those with whom they have had a business relationship with for more than 12 months.
Swindon Property assists Landlords and Tenants during these uncertain and indefinite times.
Should you need any further information or if you require a formal quotation on representing your interests with your Landlord/Tenant, please contact us.