COVID-19 has spread rapidly around the world over recent weeks, forcing firms to shut doors, requiring numerous people to work at home, and causing a record number in these months to claim unemployment. Many of us have found ways to cut our costs in these uncertain times. You might want to renegotiate your lease for your commercial premises, if the business isn’t making enough money — or worse — it had to close temporarily.
One of the main reasons for renegotiating a commercial lease is to reduce the amount that tenants have to pay temporarily or permanently for their space. Let us explore why you are renegotiating and how you can order the renegotiation.
Why Would I Renegotiate My Lease?
Also, if COVID-19 doesn’t push you to renegotiate your contract, you still benefit from learning how to do so. If your rental is up for renewal or the market shifts, you will benefit from studying the rental conditions on a long-term basis. For example, a more flexible rental term or a different rental length may be required. Also, a financial fight that has nothing to do with COVID-19 can happen in the future for your business, and it could be a business saver to renegotiate your contract.
All right, those are all reasonable reasons to renegotiate a lease, but why will a lease pay less rent? Remember that these unsafe times affect all of us. Probably your Landlord is also concerned about finance and business. Also, your business may be difficult to replace if you have been a good tenant for years with your Landlord.
What Kinds of Choices do I have for Renegotiation?
You will have to figure out what you want and plan to achieve it before approaching your Landlord with your request for renegotiation. Having regard to COVID-19 (or due to general financial difficulties), please follow up on some requests:
You will want to offer a lower monthly rental payment if your contract has expired and if you intend to make your renegotiation permanent. Especially if the conditions on the market indicate that you could get your requested price elsewhere, a landlord can agree to this. You can also request a temporary rent reduction with a pledge that after a certain amount of time, you will start paying the initially agreed rate once again.
If you don’t have enough income right now, but expect to get something back on the road again, you can ask for a rent abatement. Rent abatement is like a loan. This means that you will not pay the negotiated rent, but after those months are over, you will pay back the rent in its entirety, even with interest.
Partial rent abatement
You can also request a partial rent abatement, meaning that you’ll pay, for example, only 50% of the full rental price for the next three months, and then you’ll later pay back the other 50%, sometimes with interest.
Sub lending your building space is also an option if you can take advantage of the space by another company while you don’t occupy it or have extra office space that your business doesn’t use. Many landlords agree sublessors, as long as this does not interfere with other property tenants’ leasing terms.