Covid-19: Renegotiating an existing business lease

The spread of the Covid-19 pandemic has created many problems for businesses, not least the ongoing relationships between landlord and tenant.

As a business, you may wish to downsize space because of the effects of the pandemic, so it is vital you approach negotiations with your landlord in a professional way.

Start by checking your lease to see if there is any adverse clause in there that may prevent you from negotiating. For example, a clause stating that ‘there shall be no rent negotiation after one year’ or ‘negotiation on rent will only be acceptable after three years occupation…’ etc.

Also check what notice periods there are, especially important if your negotiation is unsuccessful and you want to move elsewhere.

Try to build a rapport and gain an understanding of who you are dealing with, and appreciate the other party’s viewpoint.

Think in positive terms of what you want to achieve, rather than what you do not want. This will help put you in the right frame of mind. Coming on too strong or too aggressive could have an adverse effect on your intended outcome. Honesty and integrity are two vitally important traits to have in any negotiation.

Once you have reached your goal, a solicitor will need to assist you in drafting an agreement to reflect the negotiation you have reached.  A solicitor can also handle the negotiations for you.

If negotiations fail or things turn unpleasant, your solicitor may be able to help here too. Sometimes taking the emotion out of the negotiation and letting independent third parties continue the talks, can help bring things back to the real issue of the lease negotiation.

If negotiations fail and your landlord will not budge, then legally there is likely to be little you can do. If there is a fixed rental period, you could try again when this ends or, if the lease allows, you can give the required notice and look to relocate to premises with a lease that better suits you.

Some common queries are:


What happens when the term of my lease comes to an end?

If you have a lease that is within the Landlord and Tenant Act 1954, which governs what happens at the end of most commercial leases, then generally speaking you will an automatic right to renew your lease – unless you have committed a breach of your lease terms or your landlord raises certain specific objections to renewal.

What is a Section 26 Notice?

This is a request that a tenant can serve to request that the landlord grants a new tenancy. The request must give at least six and no more than 12 months’ notice.

I have a Business Tenancy within the Landlord and Tenant Act. What happens if neither party serves notice to terminate it?

As long as a tenant stays in the occupation the lease will continue beyond the end date on the same terms until either party serves a notice to bring it to an end. As such there can be tactical advantages in delaying a notice or alternatively by serving a notice first, dependent on whether rental levels are rising or falling.

For help and expert advice on all aspects of commercial property law, please contact Gunduz Misiri, Senior Associate, London Head of Commercial and Residential Property on 020 7240 0521 or gunduz.misiri@mackrell.com

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Gunduz Misiri
Gunduz has been a qualified solicitor since 2011 and specialises in both Residential and Commercial Property. He acts on behalf of Buyers, Sellers, Landlords and Tenants in the acquisition and disposal of both Commercial and Residential Property.