Webinar: Steve Urwin in conversation with Rob Harley
On Tuesday 24 March 2020, Steve Urwin hosted a webinar discussion with friend and ex Editor of Property for AFR, Robert Hartley, focusing on ‘A Commercial Office Tenant’s Response to the Current Crisis’. The effects of the current situation will have a major sustained impact, and we will be returning to a new type of ‘business as usual’ that has never been seen before. As new information is released each day by the government, this is a very uncertain time for both tenants and landlords. Below are some key takeaways from the conversation:
Rob: What are tenants and landlords saying?
Steve: Tenants are thinking in the immediate term – do they pay April rent, or withhold their rent? My advice, from discussions with major landlords this week, is to encourage dialogue with your landlord – not simply withholding rent. Write to your landlord in next few days, be fair and honest, explain the impact of the situation on your cash flow. Perhaps offer to pay 50% rental for April as a means of starting discussions. However, there are multiple outcomes and indeed multiple circumstances for tenants. Be prepared to demonstrate to the landlord impact on anticipated cash flow vs fixed costs. Don’t lock in on a long term change to your lease when we don’t know where this will go in the next period.
Rob: Does a tenant have any legal right to stop paying rent in a situation like this?
Steve: No, they don’t. Your commercial lease doesn’t mean you can stop paying rental just because you’re working from home. What if the government goes into lockdown and you can’t go into the office? You still don’t have those rights.
Rob: How does this compare with other downturns you’ve seen?
Steve: Compared with GFC, this will have major sustained long-term impact that will potentially wipe out whole industries. It will be a very different life in the future. It will not be business as usual; it will be a new form of ‘business as usual’. There are tough times ahead.
Due to the high demand for our first webinar, Part 2 will be happening this Friday 27 March at 1:30pm. We will be discussing the new information provided by the government in relation to leases and rental relief.