What are the immediate common interest implications for landlords and tenants of shopping centres and retail parks? Dominic Hordern explains.
The government has set out a loose timetable for the reopening of currently closed retailers from 1 June. Retailers will need to carry out risk assessments and be “Covid-19 Secure”.
Whilst a lot of the focus will be on businesses as employers the retail sector also has to take into account customers. There will be a common interest between landlords and tenants of shopping centres and retail parks. This raises some immediate questions that both landlords and tenants need to be considering.
Should I worry about what my tenant/landlord is doing or communicate with them?
Yes. The Covid-19 Secure measures form part of the health and safety framework which impacts on all employers, their employees and visitors to their premises.
Health and safety legislation places responsibilities on both landlords and tenants to eliminate or control risks in respect of visitors to their premises and not just whilst they are within their four walls. Some of these should be seen as shared or common interest responsibilities and the impact of Covid-19 Secure will require both parties to work together.
The Health & Safety Executive will be responsible, along with local authorities, for enforcing the new Covid-19 Secure measures.
How will shopper numbers be managed?
Limiting customer numbers in stores will be required and at the first level this will fall onto the retailer. Inevitably this will result in queues outside of stores and all parties need to be aware of the implications of this.
For shopping centres the government’s guidance indicates regulating total numbers and queues should be managed by landlords. For retail parks this is less clear but as landlords have a legal responsibility for common areas they should still be pro-active in managing these areas.
Both sides will have to accept that there may be a need to agree to/temporarily interfere with or extend rights granted to tenants in order to meet the practical and legal requirements. However, both parties need to comply with their health and safety obligations and find common ground, albeit by agreement in many cases.
All involved need to be aware of the legal requirement to make reasonable adjustments for those with disabilities to ensure they have safe access.
How can common areas be managed and used?
The following will put pressure on the available common areas at shopping destinations:
- Limitations on numbers inside stores and shopping centres and the subsequent queues
- Social distancing when moving between stores and any one way circulation systems
- Outdoor click and collect arrangements or other outside of store services
- Provision of safe areas for deliveries and waste disposal
- Bike racks for employees and customers
- Hygiene stations and cleaning regimes
When making changes to common areas landlords will need to be aware of the impact on the rights granted to tenants in their leases. Leases will not always allow landlords to remove or re-designate parking or common parts or allow tenants to appropriate common parts for their own use.
If something is necessary to satisfy the Covid-19 Secure obligations then a party may be able to argue it has or should be given the right to do it. However, the position is not always going to be that cut and dry. Therefore, the parties will have to come to an agreement and record it appropriately. In some cases, because this impacts on other users, a site-wide approach will be needed as well as engagement with other land owners or authorities.
It will also be important to be aware of other consequences such as planning requirements.
Does a tenant need approval for its alterations and signage?
Being Covid-19 Secure will in most cases require some alterations to both front and back of house arrangements in shops. Whilst most leases require tenants to comply with statutory requirements a tenant’s lease will still govern what approval is needed from its landlord and any superior landlord.
Some of those alterations will require a landlord’s approval and commonly, where those alterations are internal and non-structural, that consent should not be unreasonably withheld or delayed. Delay will be a key factor here and to avoid disputes both parties should ensure there are clear and responsive lines of communication. Splitting out essential or minor alterations from the more complex will be one way to improve approval times.
What requirements do the insurers have?
Both landlords and tenants should be checking with their insurers for any new requirements they have or intend to issue. Most leases require tenant compliance with the requirements of a landlord’s insurer but these should be notified to tenants.
Further advice | Mills & Reeve has one of the UK’s most respected Real Estate teams and deals with all aspects of landlord and tenant law. If you need further advice on this topic, please get in touch with the writer, Dominic Hordern, head of asset management (+44)(0)1223 222239, Dominic.Hordern@Mills-Reeve.com.