Many landlords have received requests from incoming tenants for pandemic rent suspension clauses over the last year. The question is, are they here to stay?
Whilst the current timescale for lifting restrictions means that most businesses will be fully trading again on or before 21 June, tenants are still requesting rent suspension clauses to provide protection in the event of further lockdowns or restrictions. This is the case even for premises which are subject to agreements for lease and, in some circumstances, will not be ready for occupation for several years.
Usually, rent suspension clauses are only included on the basis of damage by an insured or uninsured risk and this requires physical damage to the relevant property or the estate which prevents use and occupation of the property or access to it. A pandemic rent suspension clause goes further than this in that the rent is suspended if tenants are unable to operate or fully operate from their premises due to Government imposed restrictions.
What does this mean for rent suspension clauses moving forward?
It appears that pandemic rent suspension clauses may well be the new normal although this will not be welcomed by landlords. From a tenant’s perspective, it is clear that pandemic rent suspension clauses are not limited to a full closure of the tenant’s business and can be much wider in scope.
Given that there are a number of points to be taken into account, it is important that the detail is agreed between the parties at an early stage in the negotiations.