Reply To: How have businesses dealt with commercial landlords who refuse to reduce rental payments, even though sales have decreased dramatically because of covid


Morena. Andy is correct in that the key question is whether you have a right to a rent/outgoings abatement in your lease. If you do not have this clause, then you are relying on the goodwill, effectively, of your landlord.
In terms of the tactic of not paying rent, at a very high level, if you do not have a right to an abatement, and elect not to pay the rent and outgoings (whether you pay a percentage or nothing), this will put you in breach of the terms of your lease. The landlord will be entitled to serve you with a Property Law Act notice of breach, and if you do not pay the rent in full, the landlord will be entitled to cancel the lease. In response to the pandemic, the Government has extended the period within which you, as a tenant, have to pay the rent to 30 working days. So, if you do not pay the rent, and the landlord issues a Property Law Act notice, you have 30 WD to remedy the breach and avoid cancellation. There are other things you should consider though if taking this approach, including the damage that it will likely do to your relationship with the landlord. This is a risk that we have seen some tenants decide they are prepared to take either to prompt engagement from the landlord or on the chance that the landlord might seek not to take action. We would strongly recommend trying to talk to the landlord before taking such a step.
Please let me know if you are not sure whether you have the abatement right under your lease – I would be happy to help.
Thank you, Amanda

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