Coronavirus Update: Negotiating with your landlord? We have some tips.
Written by Luke Musto, Associate
Earlier this week, we discussed the latest government package to have been announced by the NSW state government, providing rent relief for both commercial and residential tenants and landlords who may have been placed under financial stress due to the impacts of coronavirus.
One of the key aspects of this package is that it is designed to promote communication and negotiation between landlords and tenants. For tenants struggling to pay rent, mediation and dialogue with their landlord will have to be used alongside the government assistance to resolve disputes and issues in these complicated times.
However, this is easier said than done. Unfortunately, landlords in general have the reputation to be difficult to deal with. On the other hand, many tenants may be inexperienced in negotiation. In such cases, getting your solicitor involved to assist could be worthwhile, as it could result in being able to reach a better deal.
With this in mind, our property lawyers have already been assisting in negotiating property issues that have arisen in relation to coronavirus. While no two cases are identical, we have put together some general key tips to help people who may need to negotiate. These include the following:
- Firstly, if you are in the position that you can’t pay rent, you need to ask yourself what you want to achieve. Do you want to get a discount in rent, get more time to pay, or walk away entirely from the property?
- “Dust off” your lease and have your solicitor review so that you know where you stand in terms of what was initially agreed.
- Make a plan and have a strategy in place that works for you.
- Be extremely careful with communications with your landlord. You may be lucky enough to have a good relationship with your landlord, but there is a critical need to not make any representations to them and to keep your options open.
- This is why it is a good idea to have a solicitor speak to them on your behalf and open up a discussion. Solicitors have legal privileges meaning they can talk on a “without prejudice” basis, which means that statements made in a genuine attempt to settle a dispute can’t be later used against them as evidence in court. Think of this as speaking “off the record” but with full legal protection behind it.
- Formalise any agreed variations in writing.
- Avoid escalating disputes and always keep the negotiation door open.
Landlords will more than likely be happy to listen to their tenants concerns. We have already seen cases of landlords being proactive with offering discounts on commercial leases – keep in mind that they too want to come out of this on the other side, and will prefer having a tenant paying reduced rent on time to someone walking away from a lease altogether, as this would leave them with no rent for an indefinite amount of time. It is important that both tenants and landlords understand the commercial reality of the current situation. By planning well and negotiating early, along with taking full advantage of the various stimulus packages, businesses and residential tenants will be able to give themselves the best chance to wait out the crisis.
Finally, as we have stressed before, it is critical that renters do not view this situation as a “get out of jail” type opportunity. While the latest NSW stimulus package has put a hold on evictions relating to unpaid rent due to coronavirus, all unpaid rent will still accrue as arrears. For this reason, it is important that parties do their best to honour existing tenancy agreements and negotiate favourable discounts where needed to ensure that they don’t come out of the coronavirus situation with a massive rental debt.
If you need assistance negotiating with your landlord due to the impacts of the coronavirus, we encourage you to contact Harris Gomez to discuss strategy and options at firstname.lastname@example.org
Harris Gomez Group is an Australian law firm with 25 years experience based in Sydney, with sister offices in Santiago and Bogotá. We specialise in business and corporations law, technology law, and cross-border issues. We assist small to medium-sized Australian businesses with a variety of issues, including employment law, property law issues (such as rental contracts) and contract disputes.
Our Sydney office is located at Level 7, 92 Pitt Street, Sydney NSW 2000.