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Parfitt Cresswell Commercial Property Update 1
Parfitt Cresswell • June 16, 2020
This article is brought to you by our sponsors Parfitt Cresswell.
With the June quarter day approaching this month both landlords and tenants of commercial premises will no doubt be concerned as to whether the rents due under their lease will or can be paid. This is particularly worrying for those in the retail, hospitality and leisure sectors.
Over the past 2 months, we at Parfitt Cresswell have been advising landlords and tenants on the different ways in which they can help each other in mitigating their financial position during this pandemic. Our advice has been that landlords and tenants should work together and agree concessionary arrangements to help tenant’s businesses survive this period of uncertainty.
What types of concessionary arrangements should be considered?
There are many options to consider such as rent deferment, quarterly to monthly rent payment schedules, rent paid in arrears rather than in advance, a rent free period, a temporary reduction in rent/service charge to reduce the amount a tenant will ultimately be left owing, a switch to turnover rent for a period or a draw down from any deposit held. It doesn’t all have to be one sided, as a landlord, when asked to consider any rent concession, this may be an opportunity to open negotiations for something in return, for example to remove a break date or to add an additional rent review or settle an outstanding one.
A short-term extension is also worth considering if you are a party to a lease which is approaching the end of its term. As a tenant, you may be unable to give up vacant possession or deal with any dilapidations just now. There are important factors for both parties to consider in this situation, advice should be sought, and any agreement needs to be in writing to avoid any potential disputes later down the line.
Any concessionary arrangements that can be agreed should be documented and, although this could be done by side letter, a formal deed of variation is the recommended course of action.
In recent news we have seen some of the larger, well-known companies such as Pret a Manger appointing advisers to help renegotiate its rents in a bid to avoid store closures during the epidemic. Telefonica (O2) are asking for rent concessions and other large companies, such as Burger King UK, have gone further and refused to pay any rent during the lockdown until they are back up and running. This kind of drastic action may not be appropriate for all tenants and, for smaller businesses, maintaining a good working relationship with landlords may be more important.
Unfortunately, there may be circumstances where agreements cannot be reached, and a tenant may have no choice but to bring their lease to an end altogether. In order to do so would involve either negotiating an early exit with your landlord or, in some cases, a tenant may be able to disclaim their lease.
What are my obligations as a Landlord?
The Coronavirus Act temporarily prevents you from evicting your tenants if they don’t pay their rent and non-payment of rent will no doubt have an impact on your financial position. On top of this, as a landlord, you will have duties under your leases and a big issue for you at the moment may be the provision of services.
You should check the service charge provisions in your leases carefully. You would normally expect these to protect landlords in the event of non-provision of services for reasons beyond the landlord’s control and they may contain sweeper clauses which would allow you to add to or vary services. It is likely, for example, that as a landlord you will be able to recover the cost of any deep cleaning of buildings as restrictions ease.
You should also be pro-actively monitoring Public Health England guidance. Health and safety regulations perhaps aren’t as relevant at the moment as you are unlikely to be in a position where you can impose strict hygiene or control movement of people. However, this situation may change as different measures are introduced in this area.
What does the legislation say?
The Government introduced measures to protect commercial tenants from forfeiture due to non-payment of rent. The Coronavirus Act 2020 expressly restricts the landlord’s ability to forfeit a lease during the ‘relevant period’. The relevant period will end on 30 June 2020 but may be extended.
Unsurprisingly, since the lockdown, non-payment of rent under commercial leases has become commonplace, as we have seen with Burger King UK. According to the British Property Federation, some tenants have interpreted these measures as an instruction not to pay rent. It has been reported that some of the larger chains and shops that have been able to remain open are using the crisis as an excuse not to pay rent. It should be noted that rent is still payable and the interest that has been accruing will be payable at the end of the ‘relevant period’. It remains to be seen whether the period afforded to tenants under the Coronavirus Act 2020 will be extended and whether landlords and tenants can work together and make their own arrangements regarding the rents due later this month.
We are offering a limited number of complimentary initial consultations this month. Using our telephone and video conference facilities you won’t even need to leave the comfort of your own home/office to speak to a member of our team.
If you would like to speak to one of our expert commercial property team call us today on 0800 999 4437
or email enquiries@parfittcresswell.com
quoting reference CPROPBbul090620
to reserve your spot today.
LinkedIn is a key channel for personal branding, so your LinkedIn profile is the launchpad to building a strong professional network. The channel is also the place to be if you wish to continue relationships of key people you meet at zoom networking events allowing you to easily stay in touch after making the effort to attend the meeting. As well as being the touchstone for nurture and lead generation a well optimised LinkedIn profile is on the same level as making a good first impression when you meet in person. How do you optimise your profile? 1. Make sure you have a current and professional head and shoulders photograph of yourself. You are on the platform to do business so ensure you appear to be there for that reason so a picture with your partner, favourite pet or vehicle doesn’t cut it. It should be a current photograph as it could be embarrassing putting a ten-year-old photo on the platform and when you meet a contact in person you look nothing like your photo so it could end up being a little like a bad first date. Be authentic. 2. Also use Canva.com to create a background image as why miss the opportunity to promote your business. If you have staff on LinkedIn create an image for all of them to use as their background as it’s a little like giving them all a company vehicle with no costs attached. 3. Treat your LinkedIn profile as an online resume and ensure you complete every section – a. The about section – I split this into two sections i. My Background ii. What I Do Now iii. Include an email and phone number at the bottom of this section b. Experience – show at least the last two positions c . Education d. Licences and Certifications e. Skills and Endorsements – You can have 50 of these so put in as many as you can for example if you were a bar person you could include customer service. f. Recommendations – request these from people you know 4. Use keywords in your headline – think of the words you would use if you were looking for your goods or services. 5. Join groups which could be a. Within your industry b. Where your target market is c. Services you have an interest in If you require any help or advise we offer training or talk you through the process via zoom. Blog written by Linda Cloke of We Do Social Media Ltd Contact: Linda@wedosocialmedia.co.uk or call 07769943756
According to the Health & Safety Executive, over 11 million workdays are lost each year due to stress at work! The latest Employment Law Bulletin from our sponsors Parfitt Cresswell Solicitors focuses on the topic of stress in the workplace and the actions that employers can take to defend themselves against claims arising from this. In the Employment Law Bulletin expert Philip Luff covers: • What stress is • The duties of an employer • The potential action that an employee can bring against their employer for work related stress, and offers tips on how employers can best protect themselves against workplace stress claims To read the article and find out more about Stress Related Claims in the workplace click here . If you would like legal advice regarding an Employment Law matter take advantage of Parfitt Cresswell Solicitors’ complimentary initial video/telephone consultation with one of their legal experts. Call 0800 999 4437 or email enquiries@parfittcresswell.com today to arrange your free initial consultation.
This article is brought to you by Parfitt Cresswell Solicitors Extension of the Furlough Scheme (CJRS) On Saturday 31st October the Prime Minister announced a further national lockdown in England to address the increasing rate of Covid-19 infections throughout the UK. This lockdown commenced on 5th November and will remain in place until at least 2nd December 2020. Under the previous tiered ‘local’ lockdown arrangements, the Government had announced two Job Support Schemes which were intended to succeed the Coronavirus Job Retention Scheme (furlough scheme). These schemes were known as the ‘JSS Closed’, aimed at businesses that had been forced to close under the tiered restrictions and the ‘JSS Open’, a scheme for businesses who although affected by Covid-19, were still able to open. These schemes were due to replace the existing furlough scheme when it ended on 31 October 2020, with the Government support significantly reduced when compared with the original CJRS. However, along with the announcement of a national lockdown throughout November, it was also announced that the CJRS would be extended for a further month. A few days after this, the Chancellor announced that this extension of the furlough scheme would now run until the end of March 2021. As such, the JSS is not likely to resurface until at least April 2021 (if at all). How had furlough changed By way of a reminder, the CJRS has been through several changes since its introduction in March 2020, from the Government initially funding 80% of an employee’s salary up to £2,500, with government support reducing in recent months as restrictions eased. In October 2020, the month before the scheme was due to end, the government contributed 60% of unworked hours up to a cap of £2,187.50, with the employer paying the additional 20% along with employer national insurance and pension contributions. How will the extension work? In simple terms, the extension of the Furlough Scheme puts employers back to the same level of government contributions that were available in August 2020, with the Government funding 80% of eligible employees’ salary, but the employer having to contribute both employer national insurance/pension contributions themselves. The current understanding is that the furlough extension will operate largely as it did before, however the following now applies: • The extended scheme will run until 31 March 2021. • The employer or employee are not required to have previously used the CJRS • To be eligible, the employee must have been on the employer’s PAYE payroll by 23.59 on 30 October 2020 and the employer must have made a Real Time Information (RTI) submission for that employee by that date. • The employee can be furloughed either full-time or flexibly (for part of their hours). Employers will need to report and claim for a minimum period of seven consecutive calendar days. • The government will pay 80% of eligible wages for any unworked hours, (up to a cap of £2,500) with the employer paying employer NIC and pension contributions on these unworked hours. Employers will need to pay the employees for any hours worked as per usual. • The employer can choose to top up to 100% if they wish but is not obliged to. • The Job Retention bonus for employers (£1,000 for each employee kept on until the end of January 2021) will no longer be able to be claimed in February as planned, but will possibly be introduced at a later date to help avoid the impact of the furlough scheme ending. • The Government will review the scheme in the New Year, so it is still possible that increased employer contributions could be required prior to the end of March. As with all these announcements, further detail and guidance will follow from the government in due course. If you require further legal assistance regarding the CJRS or and other employment law issue, take advantage of our complimentary initial consultation (available via telephone or video call) today by calling 0800 999 4437 or email enquiries@parfittcresswell.com
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