Both landlords and tenants will be facing issues relating to their leases during lockdown, from implementing extra security measures, to understanding their obligations under their lease.
Danielle Keinan answers some of the most commonly asked questions from clients, and details what parties need to consider whilst navigating through this challenging time in the first part of this series.
What do I need to consider if my property is currently open and occupied?
During this time of unprecedented disruption, the UK Government is not asking all businesses to shut – indeed it is important for business to carry on. Only some non-essential shops and public venues have been asked to close. If the Property is open and occupied during the present time, there will be extra measures that need to be implemented to ensure the safety of staff and any visitors to the property, such as more extensive cleaning, installation of hand sanitisers, and limits on the number of people allowed in the space.
Duties under Health and Safety legislation include responsibilities to ensure that people working in or visiting the building are without risk to their health, which is understandably difficult, depending on the type of business you operate.
What are my duties under the lease?
The extent of the duties depends on how much control is retained under the lease. Where a whole building has been leased on a full repairing and insuring (FRI) basis, the responsibility will fall mainly on the tenant.
Where you have a multi-let building or serviced office, the landlord may well have duties in relation to the common areas. These measures may include installing hand sanitizers, deep cleaning of the building and common parts, adequate hand washing facilities and increased notices reminding visitors of the importance of regular hand washing with soap and water.
They may also need to implement procedures to regulate the amount of people allowed in the Property at any one time and to follow Public Health England guidelines on social distancing (including, where possible, maintaining a 2 metre distance from others).
The property owner should also put in place a way of sharing information between tenants in occupation of the building. Policies relating to security, shared reception, shared lifts and fire evacuation strategy will need to be re-examined to ensure they are in line with Public Health England and the Health and Safety Executive’s guidelines.
Can I recoup the costs of these extra measures?
Most leases will contain a mechanism that allows the landlord to recover its running costs from the tenants via a service charge provision. Whilst these extra COVID-19 measures will not have been specifically set out as services to be provided, they will almost certainly be covered. Most service charge clauses provide for a catch-all provision allowing for the landlord to provide any other service that it may, in its reasonable discretion, deem necessary in acting in accordance with the principles of good estate management. It will be important to check your lease on this, as there could be a limit to the amount that can be recovered, if, for example, there is a service charge cap or any exclusions.
Both landlords and tenants should review what their leases say with regards to these extra costs. It would also be advisable to ascertain from your insurance provider whether your insurance policy will allow you to recoup any of these additional costs.
Should you have any questions regarding the above information, or need any commercial property related legal advice, please get in contact with Danielle Keinan, at [email protected] or on 0207 725 8049, or your existing contact within Seddons’ Commercial Real Estate team.