The Coronavirus pandemic has been a difficult time for many of us due to a large number of factors. Aside from restrictions on personal freedoms and constant updates on the spread of the virus, many have been pushed into economic turmoil as a result of job insecurity or, in the case of business owners, diminished turnover. Even those who have benefitted from the government’s furlough scheme or wage top-ups for freelancers may find themselves in financial difficulty due to the knock-on effects of the pandemic.
Homeowners who struggled to pay their mortgage as a result of job loss or other hardship caused by Coronavirus were offered the option of a payment holiday in order to help them meet their financial obligations in the face of the pandemic. However, renters, or those who rent their business premises, have been offered no such lifeline, leading many to consider renegotiating the rent that they pay to their landlord.
It is understandable that you might be cautious at the prospect of this, however, you may find that your landlord is understanding and will consider a rent reduction on a temporary basis. Certainly, there is no harm in asking.
In this article, LDN Properties discuss the best strategies to employ when asking your landlord to renegotiate your rent in response to the COVID-19 crisis.
Ask for your lease to be terminated
Perhaps you are a business owner who is tied into a minimum period lease for your business premises. If it is possible for you to continue trading away from your current premises you might consider asking if your landlord could terminate your contract early. While this is not guaranteed, it is possible that your landlord will end your contract and, thus, free you from the obligation of paying rent.
Get any help you might be entitled to
Before asking for a rent reduction it makes sense to ensure that you apply to any relief funds that you might be eligible for. This might include a business rates holiday (eligible for retail, hospitality, and leisure businesses during the 2020/21 tax year), cash grants of up to £25,000 per property for businesses in retail, hospitality, and retail sectors, and empty rate relief. It might even be the case that you can submit an insurance claim for business interruption, or something similar.
Set up a convenient time to talk
To catch your landlord in the right frame of mind it makes sense to set up a time to talk which is convenient for them, so instead of phoning and demanding to talk at once, set up an appointment which works for them. On the other hand, if your landlord tends to communicate via email you may prefer to email them – just make sure that the tone of your email is polite and professional.
In order to convince your landlord that you are reliable and trustworthy, it makes sense to be as organised as possible when asking for a rent reduction. If your landlord is cautious and unwilling to offer a reduction straight away it can help to have information to hand which shows your company’s viability. Being organised and able to show that the business is still operational can be useful when asking for a rent reduction.
Have a good reason
You should have a good reason when asking for a rent reduction. If the pandemic has severely impacted on footfall or your company’s turnover, then your landlord should be able to understand your predicament and offer a lifeline. However, if your firm’s turnover has not been significantly impacted by Coronavirus then you may find it difficult to convince your landlord that you should receive a reduction in your rent.
Be polite and persuasive
You want your landlord to be understanding of your situation, however, it’s important that you appreciate their situation and are as polite as possible when discussing the potential for rent renegotiation. Show that you understand their concerns surrounding rent and provide evidence to show that you will be able to return to your full rental payments after pandemic restrictions have lifted. By adopting a positive, persuasive tone you will stand the best possible chance when asking for a rent reduction.
Be strategic with your negotiations
In order to secure a successful renegotiation, it makes sense to start at a sum which is below the amount that you would expect your landlord to be able to reduce your rent by. For example, if you expect that your landlord could reduce your rent by 10%, ask if they could offer you a 20% reduction. Starting low will show your landlord that you are keen to negotiate in order to receive a fair reduction in your rent.
Don’t place unreasonable demands on your landlord
While it pays to be strategic with your negotiations, avoid being unreasonable as this may turn your landlord against you rather than having the desired effect. Showing empathy and that you understand your landlord’s position is a good way to present yourself as a reasonable individual rather than someone who is entitled and uncooperative.
Consider different ways to pay
While your landlord may offer you a rent reduction for a specified period, they may also expect that you repay them after this period. It is increasingly common for tenants to make up for lost rent in installments paid in subsequent months. Alternatively, you could ask for a moratorium on rent for a certain period (for example, five months) with an agreement to repay the rent at another period. Be flexible and you may find that your landlord will consider alternative ways to pay that will make things easier for you and your business in the short term.
Even if you are facing challenging times you should remember that there are many tactics you can employ in order to avoid insolvency and begin trading again. By using our top tips you can be sure that you stand the best possible chance of getting your landlord to reconsider your rent.