commercial rent WWYD

[footsanitiser]

NC for this.My DH is self employed and rents a unit in a building in London. Days after lockdown started we were issued with our quarterly rent bill which they said due to current circumstances we could pay in 2 parts but the first part would be due mid April. We were a bit about that since he hadn't been able to work or generate income since lockdown.
We applied for a council grant and emailed the landlord to say we would pay once that has come through. We received the grant and have paid 75% of the rent (which covers April/May/June) but have generated barely any income in that time, as no new orders have been placed since before lockdown.
Another small business within the building contacted DH today to say the landlord had been asking about rent and they had not paid any. They said why should the landlord recieve 100% income when all the tenants are struggling and on massively reduced income. DH now says we should withhold the rest of our rent, and not pay any more this quarter as we have received nowhere 75% income.
Not sure how we stand on this. The other tenant who contacted us is going to email everyone in the building to see what they think.(I think a few companies will have paid in full but there will be lots like us who have taken a real hit and will struggle to pay)

It’s not the landlords fault though is it!

Ahem, we are the landlord. Ok, not your's but we do have a commercial property. Three tenants. We rely on their rent to pay the mortgage loan. If they don't pay, we will be struggling. Unlike domestic properties, there is no option for a "mortgage holiday" from the bank/lender.

It is not an easy time for many people, but remember that your landlord is human too. Trying to make a living. Please don't shaft me. Is it fairer that I take the hit and struggle to pay my bills? Why? Do my children not need food and shelter too?

Are you not eligible for any of the business support on offer? Self employed income support scheme, 10k/25k grant based on rateable value, loans...? At the end if the day it's not your landlords fault and they'll probably be relying on your rent for meeting their own bills.

I guess the argument was that why should the landlord be entitled to 100% normal income when, even with gov support we are not getting anything like that much.

It's not the landlord's fault, but that doesn't mean their business is immune to the impacts of Covid, just like everyone else who is suffering when it isn't your fault. Landlords aren't on a higher plane than normal people. Businesses everywhere we are struggling. Sometimes there needs to be a compromise, not one person merrily carrying on unaffected while someone else is on their knees.

I'm only a residential landlord but we have been absolutely flexible with our tenants and offered them reduced rent, which they have been very grateful for.

Anyway, I think you'll need to try to find a compromise with your LL instead of just withholding rent. Have you entered into a dialogue with him? Or is this just based on communications you've had with him? Most people will rather get something than nothing, so it's worth letting him know what you can afford and what you suggest for the next couple of months.

We are landlords of commercial and residential properties, it's always better to call and discuss your situation than just not pay all or part of your rent.

I'm a domestic landlord. (Taking a mortgage holiday doesn't help as the money still has to be paid eventually and interest still accrues). The two tenants struggling informed me immediately. This meant I could reassure them and we discussed when and how much they could pay and I could budget around the missing income.
It's not a matter of why your landlord should get money when you aren't earning. Do you ask Tesco (or whatever store) to give you food for free? Your utility bills? It's a business and he/she needs the income. You should call the landlord and explain the situation. Stop paying and you are in breach of contract.

thanks all. I think I will see if we can come to a compromise. In all likelihood if we pay our full rent this quarter we will really struggle to meet next quarters rent, as I doubt we will go back to normal levels of trading any time soon. I hope they might accept a slightly reduced amount over 2 quarters than the full amount this time and then risk even less next time, or terminate our lease. (DH has been a tenant for over 25 years and never fallen behind before)

Do landlords have insurance to cover this, or is covid related stuff excluded somehow?

Either way, I think if I was in this situation as a tenant I would give notice as soon as legally possible, if the nature of the business allows for a temporary disruption of that kind. When things pick up there are going to be a lot of empty commercial premises going for much lower rents, so you can save money in the meantime and also get a lower rent once you resume paying.

Your must important fact Is that your OH has been there for 25 years and never had a problem with paying the rent before. You have a long-standing relationship with your LL - be grown up and just ask to have a conversation with them about their expectations re rent payment.
I run a team of staff based in various offices across the UK. Only small offices with 2 - 3 people in each. We have spoken to each of the landlords - some have completely waived the rent, some given a %age rent discount, others have referred us to the contract and said you signed it you pay it.
We will be looking at the offices and plan to close some and keep people at home. Guess which ones we will be closing? Yep the ones who haven’t even tried to work with us.
We have however taken the time to speak to all, discuss how our business has been affected and explained what could happen if we cannot reduce our costs.
Good luck.

It depends when your lease is up, you can leave the building with notice and not be liable for rent. If the business can't make money for 9 months then that would seem to be the best option. I'm curious about what he does that can't make any money for so long, presumably some sort of public-facing gym or retail thing, can any of it go online? As others have said, if you want rent reductions then the best thing to do is talk to your landlord and negotiate.

I guess the argument was that why should the landlord be entitled to 100% normal income when, even with gov support we are not getting anything like that much.

Because you are still renting the property, you still have full use of it, and because you didn’t agree to pay rent based on what you earned, you agreed to pay rent on being able to use the place you were renting. As long as you can still do that, then obviously you should still be paying rent. I don’t think there’s any other way to reasonably see it. The other tenant sounds like a sit stirrer who wants to destroy someone else’s business just because his has been affected.

Your best way forward would be to actually talk to the landlord and explain what you’ve just explained on here then see if you can come to a compromise that works for both businesses.

Ask for a rent review as the price per sq ft has probably reduced due to market rents being devalued. Commercial landlords wil be accommodating during this time due to Covid19. Alternatively, you can also ask for a renr reduction or a rent free period if no one has been in the commercial property during lockdown..bear in mind that they may extend your lease or break clause.
I used to work within commercial real estate within lettings and renewals

The company I work for has a number of commercial leases and have been negotiating with the various landlords.

Presently the law dictated that they cannot evict you during corona but this doesn't stop the full rent being due. I'll see if I can find the link.

So it's down to negotiating between both parties. Perhaps you could pay a chunk and agree for the remaining chunk to be split onto monthly payments later in the year.

Perhaps you could pay a chunk and agree for the remaining chunk to be split onto monthly payments later in the year.

We have paid 75% so far.

Update
The landlord has proposed to give us 1 month off the rent for the last quarter, so we may even be in credit. Now I know they are open to negotiation I am hoping we might be able to agree a slightly lower amount for the next quarter as well.
@Mrex there are 20-25 occupied units in the building and they are retail, cafe and services and manufacturing for non essential retail.I didn't say we would make no money for 9 months but that it was likely to have significantly reduced income for more than just 3 months...