CORONAVIRUS – FAQs & BBG Helpline for London office occupiers

BBG is here to help during these unprecedented and volatile times. We have addressed some of the emerging implications of the Coronavirus outbreak and what this could mean for your business and your office occupation. We have also hosted two webinars with Geraghty Taylor to address what virus means for offices and flexible office occupations.

Should you wish to discuss your individual case we will be pleased to provide 30 minutes of further free advice. Please call 020 3713 1950.

If you would like a call back please email [email protected]

What can be done about my office rent during the self-isolation period or recommended lockdown period?

You remain committed to paying your rent and to your lease obligations. However, the Government has introduced emergency measures to ensure that commercial businesses disrupted by the pandemic and unable to meet their rental payments will not be evicted for at least three months. Office occupiers will remain liable for the rent after the initial 3 month period has expired and our recommendation is that the temporary suspension is properly documented by solicitors.

Will landlords re-negotiate the rental terms of my lease during the government lockdown?

Many landlords and tenants are already having conversations and reaching voluntary arrangements about re-scheduling, reducing or deferring rental payments and/or granting rent free periods. This is because landlords are equally anxious that their tenants’ businesses remain viable rather than leave landlords with empty buildings. Also, some landlords e.g. The City of London Corporation, have voluntarily proposed that tenants pay monthly, rather than quarterly, in order to assist with cash flow. We are witnessing landlords taking a pragmatic view to assist tenants during this period, provided both sides have reasonable expectations.

Can I claim Business Rates Relief during the lockdown period as I am obeying Government guidelines and unable to work from my office?

At present relief from business rates has only been introduced for retailers and leisure operators. However, we are aware that some office occupiers have contacted their local authority seeking similar rates relief and, anecdotally, some local authorities are considering waiving or reducing rate liabilities in the short term. Our recommendation is therefore that occupiers contact their local authority advising when they closed their premises, how many staff they have requesting total or partial short term relief.

I am in a serviced office and may have a cashflow problem paying the monthly licence fee?

Our expectation is that serviced office occupiers are unlikely to be evicted by their provider in the short term and that constructive discussions are likely to be productive if both sides act reasonably.

My lease or licence expires during the lock down period but I cannot get to my office to remove my fixtures and fittings and belongings?

The legal obligations of your occupation will remain and each situation needs to be looked at individually. However, we recommend early engagement with your landlord or operator at the very least to buy time. Again, if both sides are reasonable then a revised timetable may be documented, though there are no emergency rules nor legislation currently covering this point.

What happens if my landlord ceases trading?

As a rule, if the owner of a property defaults and an Administrator/Receiver is called in by the lender, then the building should continue to run as normal while a new plan is put in place. This will usually result in a later disposal of the asset. In the 2008 financial crisis, administrators and receivers continued to run some building for a number of years prior to disposal in order to avoid a fire sale.

In the current exceptional circumstances, the Government is looking at measures whereby lenders would provide flexibility and temporary suspension of interest on loans. Again, the imperative is that all parties adopt a reasonable position during this time of crisis.

What happens if my immediate tenant landlord gets into difficulty?

If you are a sub-tenant the risk is that your immediate landlord’s lease could be forfeited by the superior landlord, which will normally end your lease automatically. You are, however, entitled to apply to Court for relief from forfeiture though a Court can expect your landlord’s arrears to be paid and for you to take a new lease on the same terms as your landlord’s lease. This may be unattractive if you only sub-let part of your landlord’s premises.

In the current pandemic, we anticipate this is likely to occur only after the 3 month ban on eviction and that the ultimate landlord will be keen to keep occupiers able to pay rent and will open separate discussions with you about remaining. In any case we recommend you to contact your superior landlord who may serve a statutory notice on your entitling them to receive the rent from you directly.

I’m worried my serviced office provider might be struggling. What could this mean for me?

You can expect serviced office providers are making efforts to secure support from their own landlords with regard to a rent holiday or reduction. Many operators will also be taking advantage of new government support provisions such as paying for some of their staff to take a month holiday or reimbursing wages (up to 80% of monthly wages up to a £30k salary)

However, in the instance where a provider ceases to trade it’s probable that the immediate landlord, or an agent acting on their behalf, will seek to assume control of the business, at least in the near term.

In recent years a notable trend has been for office stock to turn from leased into flexible office space, and that trend may well continue as the economy recovers from the pandemic.

Disclaimer

The above views are our own and intended for general guidance only. We recommend that you do not place sole reliance on this and seek independent legal advice.  BBG and our staff are not authorized or qualified to guide or influence you in the preparation of your own business continuity or preparations plans from a health and public policy perspective. Government advice and support for businesses can be found at:

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-through-the-coronavirus-job-retention-scheme