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Reply To: HelloI own commercial property.  One of my tenants has clause 27.5. They told me they were paying nothing, then told me they would pay 50% and weren’t negotiating.They are back in the building, operating as of the 28th and have told me that they will only pay 75% during level 3.If they have full access to he building then how can they expect to only pay 75%?  Does clause 27.5 allow for this?  If it dosent are they I. Breach of their lease and I can go down that route?Thanks

Hi, good to hear from a landlord.

Clause 27.5 does nor grant automatic rights to a tenant to cease paying rent or to arbitrarily reduce the rent because the tenant cannot access their premises.

The clause requires the tenant to pay a fair portion of the rent while they are unable to access the premises. What constitutes a fair portion of the rental is a matter for negotiation between you and the tenant. In my opinion depending on the fact scenario, a fair portion may range from 20% to 60% plus rates and insurance.

While it is clear that under level 4 they were unable to access the premises, therefore clause 27.5 could be invoked. However, if under level 3 they are back in the premises, then it would be hard for the tenant to argue that clause 27.5 applies and the rent should be reduced.

While the above comments address the contractual perspective I would also encourage you to consider the pragmatic perspective. How is your tenant impacted by the lockdown, what is their likely cashflow situation and if you provided some short term rental relief would the tenant be able to sustain their lease and pay you rent long term?

Are you able to trade short term tent relief for extra tenure etc?

Without knowing more facts its hard to advise to a pragmatic solution for you.

Trust the above helps.

Cheers
Marcus