The coronavirus is the topic of the moment, and retailers are feeling the consequences firsthand. According to TD, mandatory store closures are costing the non-food retail sector €1.15 billion per day. Many retailers and restaurateurs are rarely prepared for such difficult times.
Revenue is drying up, while fixed costs such as rent, salaries, and insurance continue to pile up. Those who do not have alternative sales channels, such as online retail, or sufficient reserves, could quickly find themselves facing insolvency. The coming weeks will be tough for retailers. Questions such as "Do I even have to pay rent?" and "When will I get help from the government?" are currently being asked frequently.
At the moment, experts are divided, as there has never been a comparable situation before. The situation may therefore change on a daily basis and it remains to be seen how any rulings by legislators and courts will turn out.
However, the German Tenants' Association has bad news for everyone affected. Fully qualified lawyers have already stated emphatically that the coronavirus does not justify a rent reduction, even if operations have been suspended due to official measures. In principle, the property is free of defects even during a pandemic and therefore does not justify a rent reduction or suspension. All tenants therefore remain obliged to pay their rent to the landlord.
However, as the representative of tenants' interests, the German Tenants' Association wants to ensure that landlords are unable to terminate tenancies during the pandemic. The Berlin law firm Müller Radack & Schultz takes a different view. The law firm believes that there is a defect in the rented property and that a rent reduction is therefore justified. In addition, the landlord would not be able to rent out the property elsewhere on better terms.
Our recommendation is therefore not to take legal action or give notice of termination, but to wait for rescue packages or special funds, remain calm, and first seek dialogue between the tenant and landlord.
Haus & Grund takes a similar view and recommends that commercial operators in particular contact their landlords to discuss an individual solution and not to simply stop paying rent without comment. However, Haus & Grund also emphasizes that tenants and landlords should stand together and cooperate.
We can only agree with this and are happy to assist you with any further questions and an open exchange of ideas.
