Landlords vs. Tenants – How Covid is affecting rentals

UK commercial and residential tenants who miss rent payments due to the impact of the coronavirus pandemic were protected from eviction. Although, this has now changed. From the 1st June 2021, the government confirmed that court bailiffs could carry out evictions, if your case had reached this stage.

Having said that, bailiffs may not evict if anyone within the property has coronavirus symptoms, has tested positive or has been told to self-isolate by the NHS. If you do not however fall within either of these categories, then sadly you will receive two weeks’ notice of an eviction date. This is creating much turmoil and the Government has been put under severe pressure to address the landlord and tenant Covid rent row.

A government spokesperson recently said: “We are committed to supporting jobs and businesses as we build back better from the pandemic, which is why we continue to provide an extensive package of support such as the Pay As You Grow repayment holidays and are considering responses to a call for evidence on commercial rents.”

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Research by the Resolution Foundation (February 2021) estimated that the rates of arrears across all tenures were “at least twice the level of arrears observed going into the crisis” by January 2021. The Foundation estimated that over 750,000 families were behind with their housing payments in January 2021, 300,000 of which contained children who were still dependents. This would have implications for local housing authorities should arrears translate into evictions and homelessness over 2021.

As Real Estate and Commodity Trade Specialists, Metric Investments work closely with our trusted partners at E&E Solicitors to offer a variety of legal services. To ensure we can meet your needs from day one, all you have to do is get in touch and discuss your project with us. Ranging from commercial and residential property law, to immigration law and even family law, our services are sure to suit your every need.

Before you contact our legal team, here are a few answers to some of the more frequently asked questions regarding this topic.

Can my tenant claim a reduction in rent if they are unable to use the premises?

Very few leases contain a 'force majeure' clause which allows either party to say that the obligations in the lease are suspended because of Covid-19, so the answer to this question, is probably not.  In most leases the obligation to pay the rent is only suspended, or the amount of rent reduced, where there has been "damage" to or "destruction" of the premises by an insured risk or, in some cases, an uninsured risk. Covid-19 does not cause physical damage to or destruction of the actual premises, so these provisions are unlikely to be engaged.

 However, rents in retail leases will be significantly impacted where premises are forced to close, due to revenue turnover. As a landlord, you may decide to defer, reduce or entirely suspend the rent for a period to avoid tenant insolvency, but decisions of this magnitude should be documented very carefully.

Is it up to the landlord to provide deep cleaning / sanitising or any additional services to the tenants?

Again, this depends on the terms of the lease. An obligation to clean the common parts of the premises may well cover deep cleaning and/or sanitising. It would be unusual for there to be any obligation on a landlord to clean premises leased to individual tenants which may be demised, as opposed to the common parts, or for there to be any right of access to enable the landlord to do so. However, it would not be practical to deep clean the common parts of a premises without also cleaning the demised premises.

It is also important to remember that your obligations under UK health and safety law, require landlords to do everything in their power to ensure the health and safety of their employees and to ensure that people working in or visiting a building are not exposed to risks concerning their health and/or safety. Where landlords do not necessarily have control, your tenants must also comply with their own health and safety law obligations.

If I do provide these services, can I recover the cost from my tenant?

This depends on the terms of your lease. Landlords often have the right to provide and charge for additional services and this may extend to deep cleaning or other health and safety / protective measures.

Where the lease provides for the recovery of costs incurred in the supply of services the landlord considers then it should be possible for the landlord to recover the additional cost.

Can the landlord close the building?

By law, some premises have been required to close to members of the public. Closure of the building might mean that you face claims from tenants for breaches of landlord contracts. If closure is required by law or in accordance with PHE or HPS advice, then this could provide a defence to any claim for breach of landlord obligations under the lease. If a landlord decides to close a business, and this goes beyond what is legally required or recommended by the guidance, the landlord may be liable for tenants' losses as a result of breach of contract.

Can tenants refuse to pay rent if a building is closed?

Probably not. Even if a tenant has a claim for breach of contract, (when the lease says that rent is payable without deduction or set off) they should continue to pay the rent and then seek to recover damages for breach of contract as a separate action. Where there is no legal requirement for the building to be closed, consultation with the tenant in this regard may help to minimise the risk of litigation in the future.