COVID-19 and the ‘lockdown’ has thrown up a number of problems for non-residential tenants who are currently unable to trade from their premises. This impacts on Managing Trustees where they let out non-residential premises including shops and parts of the church e.g. an unused Church hall. TMCP acknowledge that many tenants of Methodist premises are experiencing financial difficulties and Managing Trustees have been approached by tenants looking for rent concessions.
To assist Managing Trustees where they have received a request from their tenant who has a genuine concern about meeting their rental payments, TMCP have worked alongside Blake Morgan, one of the firms on the panel of solicitors, on a streamlined process which can be followed to deal with such requests. The aim is to ensure that if Managing Trustees want to acquiesce to a request for a temporary suspension in payment of rent, or agree a reduction in rent, that such an agreement is documented legally (without affecting the other terms of the lease) and the process is as quick and cost effective as possible while maintaining a high quality service for Managing Trustees.
Requesting a rent concession may seem a straightforward question but such requests can have implications for the other terms of the lease. There is also a lot of financial support out there for non residential tenants who may be in difficulty. To this end TMCP and Blake Morgan have produced a document for Managing Trustees to consider in the first instance if they receive a request from their tenant; “Rent Concessions for non residential tenants – what are the issues Managing Trustees need to consider?” This guidance provides details on the Government help available to tenants and also contains guidance on what Managing Trustees should discuss with their tenants before deciding whether or not to agree a rent concession. This document will be kept up to date with any major changes to legislation for non residential tenants and TMCP will notify Managing Trustees through the TMCP newshub of such changes. However, as minor changes can occur daily because of the ever changing nature of COVID-19 and the response please do regularly check TMCP’s website and that of Blake Morgan to ensure that you keep abreast of developments.
If after considering the options Managing Trustees decide to agree a rent concession then TMCP and Blake Morgan have produced a questionnaire which Managing Trustees can complete, detailing the reasons why they are agreeing to reduce or suspend the rent, setting out the length of the suspension/reduction and what the repayment terms will be. The questionnaire can be found in the password protected area of the TMCP website (Questionnaire). If you do not have the password then you can email or call TMCP and we will provide you with the same. The questionnaire is quite lengthy but this is due the nature of non residential leases and is designed to gain as much information from Managing Trustees from the outset.
Once the questionnaire has been completed it should be sent to TMCP and Blake Morgan together with a copy of the lease. Blake Morgan will review the questionnaire and prepare a side letter for the Managing Trustees detailing what has been agreed, which can then be signed by the parties and kept with the original lease. Blake Morgan have agreed to charge Managing Trustees £200 plus VAT for producing the side letter on the basis the questionnaire is completed correctly. To help keep costs down Managing Trustees can contact the TMCP Legal team if they are experiencing difficulties in completing the questionnaire and we will provide as much assistance as necessary. TMCP have trained a number of its Legal team to deal with these enquiries to ensure the same are dealt with as a priority.
Please note that if the request from the tenant is more complicated than was envisaged then a rent concession documented by a side letter may not be appropriate. If that is the case then Managing Trustees must bear in mind that costs may not be limited to £200 plus VAT.
Managing Trustees who wish to use a different solicitor should contact TMCP so that we can approve the document recording the agreed arrangements.
There is also a step by step guide available on the TMCP website which will help Managing Trustees is following the process and completing the questionnaire.
Managing Trustees can find additional information in the non residential lease FAQs, particularly FAQ4- FAQ8 , which answer queries that Managing Trustees have raised with us.
It is important that any agreement to suspend or reduce rental payments during this difficult time are properly documented to protect both parties and ensure that the other terms of the lease are not affected. It is also important to bear in mind that as prudent charity trustees and in accordance with Methodist Church best practice, Managing Trustees are not encouraged to offer any concessions themselves but rather wait until an approach is made by a tenant and proper investigations have been made into the financial circumstances of all parties.
If you have any queries in relation to the guidance in this document please contact TMCP Legal for further assistance.