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


From a legal perspective, clause 27.5 can still apply under level 3. The extensive control measures required for businesses to return to their premises will effectively mean that some businesses won’t yet be able to access their premises. For other businesses, the restrictive nature of the control measures will likely mean that they still cannot “fully conduct” their business from their premises (like restaurants who are only able to offer takeaways, and some businesses where the distance requirements mean that they cannot have everyone in the office at once). If however your tenant is able to access the premises to fully conduct its business even with the tight restrictions, then clause 27.5 should not apply. So, as the experts above have noted, the legal position depends on the particular facts of the situation in every case.

The “fair proportion” reference in clause 27.5 relates to the degree of access your tenant legally has. However, as landlords and tenants try to work through the unprecedented nature of this pandemic, we have seen the parties bring the concept of “commercial fairness” into the discussion and take into account other factors. However, pragmatic negotiations can be difficult to have, especially where the tenant is reluctant to communicate (and it does sound from the way you describe negotiations to date as though the tenant could do better on this front). Apologies if this sounds trite to say, but we do find clients often have more productive negotiations over the phone than email. Overall, though, I agree with the comments of the experts above who encourage you to consider the bigger and longer-term picture. What effect would a PLA notice have on your tenant? Has this tenant has been reliable and paid on time pre-Covid-19? How easily/quickly, taking into account the uncertain economic times we are heading in to, will you be able to replace the tenant? Would having the tenant agree to extend/renew their lease help you? (Also note that there are questions about whether a landlord can issue a valid PLA notice if the rent is in dispute, and if you do decide to serve one, be aware that the Government has extended the remedy period from 10 to 30 working days.)

Please let me know if you have any queries about the above, and I will try to answer them, and good luck.

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