On Friday 10 April, an agreement was reached between the property and retail sectors on rent suspension for retailers due to the consequences of the corona crisis. Parties involved are IVBN, INretail, Vastgoed Belang, Detailhandel Nederland, EZK, NVB and VGO. The starting point is that the financial pain resulting from the corona crisis must be shared between retailers (and their shareholders), landlords, banks and the government. The support agreement provides guidelines for the short and long term.
Support agreement offers short-term rent reduction for tenants of retail premises
Dutch retailers who suffer at least 25% loss of turnover in the period April-May-June 2020 as a result of the corona crisis are eligible for a rental discount. The rent suspension is valid for a period of three months from April 2020. The support agreement is based on a rent suspension of at least 50% and, where necessary, 75 to 100% if possible for the lessor, taking into account proportionality in size and bearing capacity. On the other hand, the tenant can only claim the rent reduction if he provides full and verifiable insight into his (offline) loss of turnover.
Support agreement concluded for Dutch retailers
For tenants with an international character, e.g. because of an establishment abroad or an international shareholder, tailor-made arrangements must be made. Tailor-made agreements are only entered into if the retailer adopts a constructive attitude.
Eviction of the retail premises and invocation of bank guarantees not possible
If landlords and financiers commit themselves to the aid agreement, they cannot, in principle, make use of rent evictions or claim bank and/or group guarantees.
Obligations of retailers regarding rent suspensions
Retailers are expected to make every effort to reopen the store (safely) when this is possible within government guidelines. In this way they will be able to generate turnover again. Retailers must pay rent to the extent possible and in good consultation with the lessor. They may not unilaterally suspend payment of the rent.
Remission of the rent obligation for retailers in the long term possible
If after three months the impact of the corona crisis is clear, the tenant may be eligible for a waiver of the rent payments. This will differ per retailer, landlord and location. The parties to this support agreement will determine in May 2020, after consultation, which method will be applied to the possibility of remission. This does not, however, alter the fact that landlords are free to voluntarily relieve tenants of the burden. Reasonableness and fairness will also apply in the long term and the parties will have to move forward (together) in the future.
Landlords shop premises are supported by financiers and the government during the corona crisis
Banks support the support agreement and will be as flexible as possible. In consultation with the government, they have been given room to help retailers and landlords with their liquidity. Landlords and retailers with financing of up to € 2.5 million can be granted a six-month grace period. For larger financings tailor-made solutions are required. The government is calling on property financiers to follow the banks with the redemption exemption.
Retail sector support agreement and rent suspension agreements during the corona crisis non-binding
The aid agreement is not binding. This means that landlords are not obliged to comply with the agreements in the aid agreement. Therefore, agreements cannot be enforced. However, the support agreement does provide guidelines on how parties in the retail sector must deal with the consequences of the corona crisis. It also provides points of contact for tenants and landlords who are negotiating rent payments or reductions in charges.
Property law lawyer Rotterdam
Are you a landlord or tenant of business premises and are you curious about what these arrangements mean for you? Or do you need advice on how to conduct lease negotiations? Then please contact Yvonne Jansen.
