rent : corona virus

seacreature

Hi Folks......we have a bar rented, and it looks like it will be closing either voluntarily by the tenant, or possibly by the government because of the corona virus.
Does anyone have experience of, or an opinion as to how we might handle this in relation to the rent.....e.g. not taking rent for a period, accepting/ asking for reduced rent......
This rent if being used every week to meet commitments within the family....so no nest egg to rely on.
Would appreciate your experiences, and opinions....
Thank You...Seacreature

boege

First check your rent agreement. Second determine if tenant is volunteering to close or if he is being forced to close. Then chat to your legal advisor to see where you stand legally under rent agreement. Then you can decide next steps.

ted1

Rent should be paid. The government should perhaps look at tax rebates. But bottom line is the tenant should pay especially in a commercial business

seacreature

I am so grateful for your replies folks thank you.....we are in a rural area and it feels i suppose a bit 'personal' as we know the tenant. I feel a desire to treat this guy very well, as he has been a very good tenant. Also aware in the scheme of the present health situation it is not the most important issue to be addressed though it has to be worked out.
I hope ye, and all those dear to ye are well, and remain well.

Pawwed Rig

Aren't there emergency loans available for businesses in trouble due to shutdown? Maybe your tenant could avail of this.

The_Honeybadger

ted1 wrote: »

Rent should be paid. The government should perhaps look at tax rebates. But bottom line is the tenant should pay especially in a commercial business

Of course rent should be paid but a lot of businesses in this sector will have minimal reserves and their sales are about to drop to zero, they simply won’t be able to pay. If this lasts two weeks and things return to normal then great and we can call it a blip, but even when they reopen I expect consumer spend will be on the floor for some time and every retail and hospitality business will be simply clinging on, many will close in the end.

OP you are in a tough spot, as is your tenant. You can of course take a hard line and say rent must be paid in full but that won’t help you when your tenant walks away altogether. Have a look at what you can realistically accept and be prepared to engage with your tenant, I’m sure they will approach you shortly. Do review your lease and take legal advice also.

As for the emergency loans and supports, from what I have seen they are mostly a repackaged incarnation of the existing Brexit supports that nobody is accessing because you have to prove you don’t need it first. I don’t think they will be much use to a rural pub unfortunately.

Sheeps

The coronavirus is going to hit us all hard in the wallet. There's no escape from that, least of all for the tourism and food services industry. We are now certainly heading into an economic recession the severity of which will be determined by how quickly and efficiently we can stop this virus from spreading. The longer this goes on, the harder it will be for businesses to survive and to keep jobs.

Consider the outcomes of your actions when deciding what to do. Will charging them rent put them out of business? Will charging them rent encourage them to keep the doors open and create additional risk that could translate into greater hardship down the road through a prolonged recession? During a recession, will you be able to find another tennant to generate income if this business closes it's doors for good? I would encourage you to come to some arrangement with the tennant in order to ensure that they are best placed to survive this pandemic, so that when it is all over society can do it's best to resume economic activity where it pressed pause with as little permanent damage as possible.

L1011

Pawwed Rig wrote: »

Aren't there emergency loans available for businesses in trouble due to shutdown? Maybe your tenant could avail of this.

Loans need to be paid back; its not like a bar in a rural area is going to see a huge uptick of revenue when it all returns to normal so it just ends up being an albatross.

Basically if you try enforce the lease agreement here the tenant is likely to fold; its up to the owner to figure out if its better to give some leeway and hope it works out or try get someone else in. Not an ideal situation for either side.

Pawwed Rig

L1011 wrote: »

Basically if you try enforce the lease agreement here the tenant is likely to fold.

I don't think the OP said that.

Loans can be repaid over long periods so this might suit the lessee. To determine their ability to repay I would need to see their financials

Spark Plug

You have two option (a) agree a reduced "rent abatement" for a specific period of time and get you solicitor to draft a side letter to lease documenting this agreement or (b) continue to invoice tenant for the full amount of the rent....in reality they won't be able to pay and will likely pay nothing or a reduced amount. The advantage of (b) is that the arrears build up and don't go away, they can be demand any time in the future...why is this useful? well say a better tenant comes along and want to rent the premises from you, how do get the sitting tenant to surrender the lease?....issue a demand letter to settle the arrears...so arrears can be useful in terms of future tenant management.

Drifter50

All good and legally spot on answers but we are heading into the biggest period of uncertainty in our lives. Most businesses will close for a period that is yet to be determined. If there was certainty we could all ride it out. If you were told to close for a period of 2/3 weeks that could be managed. However most businesses will not have reserves to withstand the uncertainty and will be letting employees go left right and centre as they have no alternatives. I know I will let the staff go probably during the next few days and my immediate plan tomorrow is to start communicating with the bank that I have commitments to, my landlord, my suppliers, the revenue and basically everyone I have commitments to. Interstingly I spoke to Vodafone on Friday about a separate issue and asked them what plan have they got to deal with their customers in the event of most of their customers being unable to pay bills. I was given the reply that the management had not considered it. So we`ll see

mountai

Remember --- " You cant get blood out of a stone " , op seems like a decent person --- BE KIND EVERYONE .

Gumbo

We still have to pay our Creche fees even though Creche was shut down.

enricoh

If you play hardball and he walks realistically how long would it take to get a new tenant?
2 months?, 6 months? Never?!
I reckon a lot of rural pubs will fold this year, a lot were barely threading water before this. Go as easy as you can imo.

Wanderer19

Gumbo wrote: »

We still have to pay our Creche fees even though Creche was shut down.

Why?
Are they still paying the staff their full wages?
Is it in in your contract?
I know it's common for creches to charge when they're shut for bank holidays or over Xmas, but to expect payment when it could be weeks, in which you may not be working, or getting paid, is unreasonable.

Claw Hammer

The reality is that the tenant of that bar will never be seen again. You can expect the keys in the door in the next few days. The same is going to happen to landlords of business premises all over the country. Letting of commercial premises is not for widows and orphans.

spurshero

Some posters here are detached from reality .most rural pubs are hanging on by there fingertips . Op if you can cut your tenant some slack it would be great . Some pubs won’t open again this is the final nail. If you have a good tenant be good to keep them as there not easily got either .

seacreature

Hi Folks.......just returning to the topic of rent in this present climate of closures and uncertainty. Firstly can I again say thank you very much for your suggestions and opinions so far.
Im wondering if any of you - landlords or tenants would share your experiences - what you have done in your particular circumstances, and how this has worked out for ye.
I have said to the tenant here to hold off paying the rent for a week or two,( that was the day government said to close pubs) and we can chat about it a little down the line.I haven't gone back to him yet......though would very much like that he would pay some rent as this income is an important stream to meet my financial commitments. ....many thanks....Seacreature

Mrs OBumble

As a LL I've agreed to a 20% reduction for April because that's what the tenant asked for.

As a tenant, I've paid my rent: I'm still working, so to do othwisecwould be reprehensible

Lux23

I think it would be a mistake to push him to pay the rent, you want him to be a tenant once all of this is all over? Everyone will be affected by this, so the financial commitments you have may have to wait too.

Claw Hammer

The chances of him paying rent are probably nil. He obviously has no income now that the pub is closed and his priority will be maintaining himself and his family. Why would he go paying rent for a premises that he can't use and make any profit from? He will put bread on the table first.

BrokenArrows

seacreature wrote: »

Hi Folks......we have a bar rented, and it looks like it will be closing either voluntarily by the tenant, or possibly by the government because of the corona virus.
Does anyone have experience of, or an opinion as to how we might handle this in relation to the rent.....e.g. not taking rent for a period, accepting/ asking for reduced rent......
This rent if being used every week to meet commitments within the family....so no nest egg to rely on.
Would appreciate your experiences, and opinions....
Thank You...Seacreature

Forget about COVID-19

If the tenant had shutdown their business at any other point how would you have treated it. Treat them the same way.

HalloweenJack

How long has the tenant been in the bar? I say this as they may have built up a loyal client base. Can you guarantee that those clients will return if the tenant leaves? What is their income like and how are they as a tenant? Do they pay the rent in full and on time every month in normal circumstances? If so, do you reckon they will be able to pick up where they left off once all this is over?

The tenant's income is zero at the moment. They may have something saved up but that will evaporate the longer this goes on. If you push this matter while the current crisis continues, your tenant will have no choice but to remove themselves from the agreement. Are you confident that you will be able to get someone else in at the same rate and quickly? Or you may have to leave the place idle for a long period of time until someone picks it up. If no-one is interested, you may have to lower the price.

This is a unique situation. We all have financial commitments and we are all being impacted by loss of income and/or inability to work. This causes a domino effect. You can't meet your financial commitments because your tenant can't do likewise.

In the case of your financial commitments, are you being asked to pay them in their entirety?

HalloweenJack

BrokenArrows wrote: »

Forget about COVID-19

If the tenant had shutdown their business at any other point how would you have treated it. Treat them the same way.

The OP cannot "forget" about COVID-19. The tenant would not be in this situation if it weren't because of this. This is not voluntary.

beauf

seacreature wrote: »

Hi Folks.......just returning to the topic of rent in this present climate of closures and uncertainty. Firstly can I again say thank you very much for your suggestions and opinions so far.
Im wondering if any of you - landlords or tenants would share your experiences - what you have done in your particular circumstances, and how this has worked out for ye.
I have said to the tenant here to hold off paying the rent for a week or two,( that was the day government said to close pubs) and we can chat about it a little down the line.I haven't gone back to him yet......though would very much like that he would pay some rent as this income is an important stream to meet my financial commitments. ....many thanks....Seacreature

That bar will have no business for 2-3 months perhaps longer. If they decide it's no longer viable and quit you might be a long time getting a tenant back into that bar. You need to plan accordingly.

the_syco

Have a read of this; https://dbei.gov.ie/en/What-We-Do/Supports-for-SMEs/COVID-19-supports/Government-supports-to-COVID-19-impacted-businesses.html and see if the government can assist your tenant pay the rent.