'Covid-19 clauses’ in UK leases being discussed

Real estate occupiers in the UK are requesting legal advice on introducing ‘Covid-19’ clauses into their leases. 

London-based global law firm Taylor Wessing said it had a number of lawyers advising clients on the issue, while noting that there was not yet a ‘market standard’ approach.

Christopher Turley, who heads the Real Estate & Construction Group at Taylor Wessing, said: ‘In many countries across Europe, statutory backstops mean commercial tenants are familiar with the concept of force majeure and might assume that a global pandemic like Covid-19 can relieve contractual liabilities. This doesn't apply in the UK, however, where there has never been a reported case applying our limited doctrine of frustration to a real estate contract.’

He added: ‘Only last year, the European Medicines Agency (EMA) was unable to successfully argue that its rental obligations to landlord Canary Wharf Group were frustrated by Brexit. 

'Moving forward, the government has not mandated any clear contractual solutions and so it's left to landlords and tenants to agree new terms in their contracts that protect might them against Covid-19 and other future crises.'

Clare Harman Clark, a senior professional support lawyer at the firm, added: ‘This crisis is raising important questions on the distribution of risk within new contracts – it is in everyone's interest to avoid massive rent debts or broken agreements leading to expensive disputes, especially when we have no precedence of frustration upon which to rely for an extreme solution.’