Nick McCalmont-Woods « McCalmont Woods

When life returns to normal after Covid-19 has abated, the big question for many businesses will be “what does normal look like?” After analysing their business’s response to social distancing measures, for some corporates there is likely to be a realisation that they are renting more office space than they actually need. GoSpace AI Chief Partnership Officer Neil Usher notes that every company that has conducted a space utilisation study has consistently found that between 25-50% of desks are unused throughout a day.

Factor in the impact of the Minimum Energy Efficiency Standard (MEES) Regulations on older inefficient office properties, and we arrive at a scenario where occupiers are exiting sub-standard office stock and concentrating core business activities in the best and most efficient real estate. With a breaking down of perceived cultural resistance to remote working perhaps the next big question to ask is ‘where should those core activities be located?’

We are keen to hear your views on how businesses might adapt to the new normal. Please email us with your thoughts.

Thank you and, please be more careful than you think you should.

With businesses hurting across the UK and tenants looking for financial support during the coronavirus crisis, occupiers are advised to check the terms of their lease and any insurance policies held to establish if they have grounds for relief as the Chancellor Rishi Sunak set out the following package of temporary measures to support businesses:

• a Coronavirus Job Retention Scheme
• deferring VAT and Self-Assessment payments
• a Self-employment Income Support Scheme
• a Statutory Sick Pay relief package for small and medium sized businesses (SMEs)
• a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
• small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
• grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
• the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
• a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
• the HMRC Time To Pay Scheme

The above measures are unlikely to offer much in the way of succor for the majority of corporates and all of the legal opinion we have studied is consistent in advising that (subject to certain exceptions) tenants are not entitled to: a) terminate leases because they choose to close their business or can no longer afford to pay rent (unless entitled to do so under the terms of an existing break option), b) withhold rent or pay a reduced amount due to cashflow problems and, c) cease paying business rates. Note, service charges are usually reserved as rent.

Our advice is that occupiers (and/or their tenant representatives) should actively engage with their landlords at the earliest opportunity to discuss the options available, as there are a range of other solutions which could potentially provide some relief during this period of disruption.