If you and your business are struggling to make ends meet during the COVID-19 pandemic, rent relief can take a huge load off of your shoulders. Today, we’ve gathered some tips for negotiating rent deferment or relief with your landlord.
How to Negotiate with a Landlord for Rent Relief or Deferment
The coronavirus has changed every aspect of how you operate your restaurant or bar. If you’re like most small business owners, your finances have definitely been affected. One of your largest recurring expenditures is the rent you pay each month. It’s also more than necessary to keep your business operating. Negotiating rent relief or deferment with your landlord can be tricky. However, doing so can take a huge amount of stress away. This allows you to focus on keeping a successful business running in this extremely difficult time. We’ve collected some great tips and tricks for negotiations, and wish you the best of luck!
Review Your Lease
Before asking to set up a meeting with your landlord, it’s always a good idea to review the terms of your lease. Especially pay attention to arrangements that are in place regarding insurance. Also look at clauses relating to special circumstances, non-recurring amounts you’ve paid, like your security deposits. Additionally, be aware of information about what the consequences are for defaulting on your lease. Knowing all of this info will help you negotiate an agreement with your landlord that works for both of you.
Know What You’re Negotiating
There are many different outcomes that negotiating rent can lead to. It’s important to have an idea of what your ideal situation would be, as well as other options that you’d be able to agree to. For example, rent reduction effectively decreases the amount you pay in rent for a set period. Conversely, rent deferral postpones the collection of your rent payments for a pre-established period of time. This latter option shouldn’t be confused with rent abatement. This also pauses your rent payments for a set period, but only as a stepping stone as you and your landlord work out the rest of the rent negotiations.
There are other options for rent relief that you might not have considered. A “grace period” for payments gives you more time to make your rent payments without incurring late fees or other charges. You might also think about asking for your security deposit to be converted to a credit you can use against the amount you owe in rent. This can give you time to work out other options for paying future charges. You also might be able to enter into a longer-term lease, which may have a lower monthly rate. You can also ask for a fee waiver that will allow you to have late fees that you may have encountered over the last few months forgiven or decreased.
How to Negotiate Rent Relief
Contact your landlord and set up a time for a phone call or virtual meeting. Be willing to compromise, and have a backup plan. Provide evidence of your business’s financial hardship to hand over to your landlord if it’s requested. Know your numbers and map out multiple possible outcomes before entering into negotiations. This way, you know which ones you will be able to feasibly agree to in order to hold up your end of the bargain. Document the agreement once you’ve come to one. It may be a good idea to invest in the help of a lawyer here, to make sure there’s no confusion down the road.
We hope that these tips were helpful to you as you work to make the best choices for your business in order to make it through these tough times. As always, we’re all rooting for you!
