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LETS GET DOWN TO BUSINESS.

Question :
How are tenants approaching difficult landlords who are reluctant to accomodate rent relief and what does fair rent relief look like to various retailers? 

Question submitted 24/04/20 @ 03:50pm
Industry: Retailing
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  • Hello, the general consensus from all the business owners I spoken to would reflect that most have landed on a 50% reduction for an initial 3 month period.

    Landlords have realised that it will be more secure for themselves to hold onto current tenants for the long term if they suffer a bit of short term pain. If they have tenants falling over it will be extremely hard for them to get new tenants given the foreseeable trading environment. So you are probably in a better negotiating position than you might think.

    Also consider where you are in the term of your existing agreement. If you are near the end of the agreement and plan to stay longer use that as part of your negotiation stance. I think you need to clearly spell out your position and paint the picture for them what the future will look like if they lose you. I would further encourage you to seek some legal advice on your lease agreement to understand all your options.
    Best of luck.

    HI there – take a look around the legal and retail forums for good advice – in addition, we are seeing abatements at the 20-50%, on average – but with some cases of total abatement. Obviously the terms of your lease are important and it is an extreme case to just stop making your payments, but if you can’t get the landlord to come to the table for a conversation you may have to take this action to have a quality conversation. Again, just be careful and aware of that implication around your lease terms. Andy

    Hi,

    First thing is to have a look at your lease – if its a 6th edn ADLS lease form then you should have a right (clause 27.5) to only pay a fair portion of your rental.

    If you dont have a rent abatement clause then you will need to negotiate for a retn abatement.

    I have negotiated 50% to 80% rent reductions for clients while agreeing to pay the rates and insurance opex.

    Be open with your landlord about your cashflow. It is in your landlord’s interest to keep you as a tenant. You may need to work with both your landlord and the landlord’s bankers to negotiate both a rent rebate and a mortgage holiday so that both your and your landlord’s cashflows are aligned.

    Also consider what you can offer the landlord in terms of extra tenure etc to strike a deal that meets both parties needs.

    cheers

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