Can Pandemic Clauses be Inserted into Commercial Lease Renewals?

21 October 2021

The Government’s introduction and extension of COVID-19 restrictions has had a marked effect on commercial property arrangements, with an increase in tenants seeking to include pandemic clauses when negotiating their lease renewals.

While measures have been introduced to support commercial tenants in these unprecedented times, the topic of pandemic clauses has become more important than ever, and it is essential that landlords understand the implications of these clauses when negotiating a commercial lease renewal.

What are pandemic clauses?

COVID-19 related clauses, also known as pandemic clauses, are provisions in a lease that are triggered by certain types of catastrophic events. These provisions may cover several lease requirements, such as ‘Keep Open’ clauses or service charge provisions, but the primary issue is usually the payment of rent.

Rent reduction or suspension provisions apply when a commercial property becomes unusable due to restricting situations such as the closure of the premises due to Government regulations. Pandemic clauses allow rental payments during these restrictive measures to be reduced, delayed, or suspended when certain requirements are met.

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Property Wire