Coronavirus: Advice for business tenants – thinking ahead and making your business premises work for you

The restrictions imposed as a result of the coronavirus have forced immediate changes to previous ways of working. As the current situation begins to evolve and settle, it is likely that the changes to working practices will have a profound and lasting impact upon how and where we work in the times ahead.

Ensuring that business premises are being utilised to their full potential, to maximise efficient use of space and flexibility and to minimise business overheads, will also be an integral part of maintaining commercially sustainable business practices moving forward.

Inefficiencies can be addressed by restructuring lease arrangements, although the extent to which this can be achieved will depend on securing the landlord’s co-operation to renegotiate terms (the exercise of any tenant’s break right to bring a lease of unwanted premises to an end being the only real exception). Engaging landlords at an early stage to discuss and agree potential alternatives is recommended. These may be:

• Re-gearing on revised commercial terms acceptable to landlord and tenant:
  • Surrender and new lease – ending an existing lease and taking a new lease of the same premises.
  • Extension of an existing lease – taking a new reversionary lease for a further period and varying the terms of the existing lease (for example, by granting a rent concession or agreeing a nil increase on rent review).
  • Relocation – ending an existing lease and taking a new lease of alternative and more commercially suitable premises (owned by the same landlord or otherwise).
• Disposing of surplus premises:
  • Ending the whole or part of an existing lease by a surrender.
  • Exercising a tenant break right.
    Care must be taken in each case to review the individual lease terms and requirements and to consider other implications of any restructuring action (e.g. tax liability, penalties and loss of any statutory rights).

If you have any questions relating to your business occupation, please contact Sam Benfield using the details below.