Lease Variation For Tenants During COVID-19 as at 31/3/2020

• swapping to monthly rental payments, rather than quarterly;
• a suspension on rental payments for a short period, sometimes on the proviso that the ‘missed’ rental payments are spread out over a fixed period (and added to the normal rent) once all has returned to normal;
• temporary reductions in rent;
• rent suspension/holidays in exchange for the
• cancellation of a future right to break;
• a permanent or temporary conversion to rent being calculated on a ‘turnover-only’ basis (with a base minimum payable, regardless of the tenant’s actual turnover); and
• a 3 or 6 month rent suspension with an extension of the lease by a further 3 or 6 months (so the landlord ultimately does collect the lost rent).

Once the terms of any solution have been agreed with the landlord, it is important that they are properly documented to ensure the lease itself is not inadvertently varied or any landlord obligations waived. Variation can be achieved with a side letter in the case of paper leases with a term of 9 years or less but if the lease is for a term of more than 9 years, this will require a variation contract to be passed before the Royal Court.

Tenants also need to be alive to the fact that currently, as a matter of law, the tenant needs to continue to pay the rent due under the terms of their lease without deduction or set-off, notwithstanding the fact they may have had to close their business as a result of the Government of Jersey’s imposition of the Island-wide ‘lockdown’, unless they can agree a concession or variation with their landlord or until such time as the Government of Jersey passes legislation to change the rights of landlords and tenants under commercial leases.