COVID-19 has changed our lives both personally and professionally. Thankfully, it now feels like we are starting to see some light at the end of the tunnel as lockdown measures slowly begin to ease.

This pandemic has brought a great deal of loss and suffering to peoples’ lives. It has also presented a unique and unprecedented challenge to businesses that has required the swift implementation of flexible contingency plans.

Most businesses have experienced a sudden and drastic reduction in their ability to carry out operations, which in turn has created financial pressures where outgoings continue whilst income has shrunk.

For most businesses, their highest expenditures will be attributed to staffing costs. Chancellor Rishi Sunak has been widely praised for the implementation of the furlough scheme by businesses for easing staffing costs. Approximately 8.7 million people in the UK have been furloughed, accounting for over a quarter of the UK’s workforce. A British Chamber of Commerce survey found that a third of businesses had at least 75% per cent of their workforce on furlough. The scheme has been a major support to many businesses.

After staffing costs, rent is often the biggest liability for businesses. So, what can businesses do here? Unfortunately, there is not a one-size fits all answer other than communicate with your landlord.

Whilst the government has encouraged commercial landlords to be accommodating there is no legal obligation on landlords to offer support. At The Wigley Group, we have offered rent deferrals or made changes to payment schedules as examples of ways to support our tenants.  Whether they are household names or micro businesses, we have dealt with our tenants on a case by case basis and strived to provide support where it is needed greatest.

From the perspective of a landlord, the supporting of tenants is a fine balance. Landlords have a vested interest in the continued long-term success of their tenants. With this is mind many are motivated to provide support during the Coronavirus pandemic, if doing so ensures future benefits. Despite common misconceptions, landlords are in no way especially immune to the impact of Coronavirus. Like all businesses, landlords must take actions to ensures they meet their own obligations to safeguard their survival during and after this pandemic.

Unfortunately, there is a consensus within the industry that some commercial tenants are seeking to take advantage of the situation to negotiate a better position and/or a reduction in rent despite being in a strong enough position to met their commitments comfortably. This makes landlords’ task of deciding who to offer help to more difficult and means that genuinely struggling tenants could miss out.

So how do landlord choose which tenants to help and which tenants not to?

By making an assessment based on the facts they have available to them. Tenants can boost their chances of receiving support from their landlords by being open, honest, and frank about their situation. Doing so facilitates their landlord’s understanding of their position. This is especially true if your business is really struggling. It is advisable to have a clear and realistic plan of how you believe your landlord maybe be able to help you, and how this support would fit into your wider contingency plan.

Engaging in regular communication with your landlord will build trust. The greater level of trust that exists between the parties, the greater willingness the landlord will have to support a tenant (if they are able to).

On the other hand, landlords will be mistrusting and assume the worst if tenants bury their heads in the sand and avoid engaging with them. In these situations, a landlord will feel backed into corner and that their only option is to act robustly to protect their interests, this often means the commencement of formal recovery measures.

So, remember, the best of course of action is:

  • Regularly communicate with your landlord;
  • Be open about the challenges you face;
  • Share your contingency plans;
  • Ask for help, but be realistic with your requests and expectations; and
  • Do not bury your head in the sand