Considerations for UK Occupiers ​

We are currently in unprecedented times and most sectors have been affected by the changing business environment. In the UK all sectors have specific challenges to overcome, most companies have fully instigated Business Continuity Plans (BCP) and are operating flexible or home working practices, whilst customers have been advised to keep away from public meeting places as part of the Government’s social distancing guidance, accessibility to certain services is increasingly restricted.

In light of the significant business impacts that COVID-19 is bringing, below we provide our thoughts on principle areas of consideration for our UK occupier clients.

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Alleviating Rental Difficulties

​ We appreciate that you and your business will undoubtedly be affected by the situation, many companies are in a very difficult trading position and may wish to approach landlords for support in considering temporary, or more permanent, changes to payment terms, including: moving to monthly payments, rent reductions and rent holidays.

Landlords are also being impacted as they will increasingly receive such requests and will be concerned about potential voids.It is important to position your proposals in a well balanced way and you may consider providing them with the prospect of a longer-term gain, this could include agreements to defer and repay rent at a later date, or to agree extensions to existing lease durations. Be sure to highlight the strength of your business, its local demand and when you can expect realistic recovery.

Remember if you are a landlord for other properties yourself, you’re likely to receive similar requests.

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Service Charge Influencing and Relevancy

Landlords will remain liable to provide services to their properties where the leases include service charge provisions. However, there is an opportunity in the current environment to influence a reduction in service charge costs by ensuring that they remain relevant to current requirements.

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Areas for discussion include:

o Delaying any major and non-essential repair works

o Putting marketing and events on hold

o A review and scaling back of cleaning, landscaping and concierge presence relative to the current need of the property

o Routine asset inspections, tenant meetings and non-statutory assessments to be placed on hold

o A reduction in opening or operating hours, particularly if no essential services such as large food stores are present

o Areas of schemes to be closed where possible

A review and re-issue of current year budgets in light of the above adjustments should be carried out. ​ Reconciliations should also be completed promptly following year ends.

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Business Rates Liabilities

Over the last week the Chancellor of the Exchequer has made a number of announcements around business rates relief which will be beneficial for certain sectors of the market. Our Ratings team at Colliers are able to provide support on how to apply for and access this relief. Get in touch with the team here.

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Insurance

The government has made COVID-19 a notifiable event so that cover could be assured where this was available under policies. They have made it clear that insurance companies are expected to support businesses, check your policy documents to ensure you’re utilising policies effectively.

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Vacant Properties

When a property becomes vacant, buildings insurers should be notified immediately and they will have various measures that they insist must be conformed to, in order to ensure that cover is retained.

Properties should be cleared, with services drained and utilities isolated, this will minimise the risk of damage to the property. ​ Utilities companies should be contacted to advise that the property is vacant so that they can adjust billing as appropriate.

Where possible, intruder alarms should be operational and maintained in efficient working order during the period of unoccupancy with existing central station connections being maintained and existing maintenance contracts continued.

Internal and external inspections should be undertaken to ensure that the building or unoccupied portion is secure and that no damage has occurred. Such inspections should be recorded in writing, meter readings should be taken at each inspection.

Unless key holders are local to carry out the property inspections and allow access for the various visits that will be required, it may be cost effective to employ a suitably trained security contractor to ensure the requirements are met and any future access requirements can be accommodated. ​ Make sure you share relevant documents with ​ the Rating team in order to start the rates recovery process.