the new “Good Faith” relationship between landlords and tenants needs to continue beyond lockdown

The end of the Jobkeeper period is fast approaching as businesses begin to prepare for a new normal after lockdown.

​Over the last few months conversations have taken place between commercial tenants and landlords as they settle on rental relief agreements. Historically, landlords and tenants have not been expected to act in the best interest of the other party. But COVID has forced us to come together and be considerate of each other’s position. This new found co-operation will hopefully re-define the commercial landlord-tenant relationship and answer the following questions in the immediate aftermath of lockdown:

New Space 
Different working arrangements that have arisen during COVID will lead to many tenants re-assessing their current space. Will a smaller space or new location suit the company from now on?  Tenants should consider opening discussions with their landlord if their lease is due to be renewed soon.

Service Charges 
As buildings open up after a period of inactivity what areas of preparation will fall within service charges? Who pays for remediation works and preparing for things like social distancing? Such issues will come down to interpretation of the lease, however a strong and co-operative relationship should assist in deciding who will ultimately bare the cost. 

Fitouts
Redevelopment or fitout works that have been halted during lockdown should be discussed in order to negotiate an extension of time for works to be delivered. 

The next step in rental relief 
Now is the time to start proactively engaging with each other to finalise rental relief arrangements and follow through on what was discussed when the Omnibus Bill was passed. Tenants need to consider their financial position when the moratorium ends and the possible impacts to their lease and rental payments if further agreements are not reached.

Healthy and safety  
Good faith and cooperation isn’t just expected on the money side of things. Both landlords and tenants will need to continue their duty of care to their occupiers, teams and visitors. Landlords should install facilities and practices that promote social distancing and hygiene in their buildings, while tenants should do everything they can uphold these measures while occupying the space.

​The return to work will not be a simple process and will require a great deal of co-operation and collaboration between landlords and tenants. This new type of landlord-tenant relationship is one that BRM has encouraged since the beginning of the crisis and we continue to advise tenants to work together with their landlord to address the issues that will face both parties in the new working world.