Operating a property rental business during a pandemic and economic downturn double whammy is one of the worst scenarios business owners can be in. There is uncertainty as to the collection of rent from tenants. It is also possible for many tenants to leave, as they can no longer afford to pay the rent unless they get a government subsidy, which will only be there for a limited period.

So what can businesses do to make the most out of the dire situation? Can businesses involved in the rental of apartments, residences, or other real estate properties survive the difficulties brought about by a major disturbance in the economy?

The good news is that there are ways to stretch resources and profitability while mitigating risks and adverse outcomes in the rental market. Here’s a rundown of what businesses can do to avoid suffering massive losses or completely going bankrupt.

Enforce a renters insurance requirement

Unless there are specific local laws that prevent a business from doing it, it is legal for apartment or rental home owners to require new tenants to obtain renters insurance. This insurance provides most of the benefits of a homeowner’s insurance except for dwelling and structure coverage.

This insurance mostly protects the tenants, but it also indirectly affords some degree of protection for the property owner. With renters insurance, landowners can be sure that they will be obliged to worry about the welfare of tenants in case an accident happens. Even in the case of man-made incidents like fires started by the tenant’s children, the insurance can pay for the possible damage.

Unless there are specific local laws that prevent a business from doing it, it is legal for apartment or rental home owners to require new tenants to obtain renters insurance.

Apartment owners can go after tenants for damages they cause to a property, but it would be better to have renters insurance cover for everything. In the economic situation the world is facing now, there is a high likelihood that tenants will be unable to pay for damages. Many are even having a hard time paying their rent. It is advisable to learn all you can about renters insurance coverage.

Get business property insurance

As a rule of thumb, every business should sign up for business property insurance. This is an insurance plan intended to compensate for the damage to or loss of properties used in the operation of a business.

Business property insurance can provide the cash necessary for a business to resume operations as soon as possible. Not all property insurance plans provide the same coverage, so it is crucial to carefully look at the terms and conditions. Most policies only cover a certain percentage of the insured property’s market value.

Also, there are specific cases that are not covered. Negligence or the violation of building codes, for example, can be used as grounds by insurers to avoid providing compensation. Regular property wear and tear are also not covered by this kind of insurance.

Moreover, some insurance companies only provide certain coverages if the insurance holder pays for add-ons. Businesses should be mindful of this, as it is quite common and largely acceptable for insurance companies to run ads that may be misinterpreted by consumers.

Make use of the LLC protection

Many apartment and rental property owners operate their business as sole proprietors or individual business owners. This can be disadvantageous in the face of major problems. That’s why some legal experts advise rental property owners to make their businesses LLCs or limited liability corporations.

LLCs protect business owners from liabilities that may arise from the operation of a business. An LLC company, an artificial entity, becomes the sole party answerable to liabilities that may be incurred in the course of business activity. As such, only the assets of the LLC are exhausted to pay for liabilities or claims for damages. The individual business owners will not be legally compelled to cover all liabilities.

LLCs protect business owners from liabilities that may arise from the operation of a business.

Additionally, it is possible to take advantage of pass-through taxation. According to Legal Nature, this means that the LLC does not pay the taxes. Instead, taxes become the responsibility of the business owner. This gets rid of the double taxation instances for single-member LLCs, wherein the business is taxed as if it were a sole proprietorship.

However, there are some intricacies involved in going with the LLC option. It is advisable to consult a corporate law specialist to be acquainted with the pros and cons as well as the process and requirements.

Be in close communication with tenants

Treat tenants well to avoid losing them. When the economic tumbles, it is only logical for many to look for ways to reduce their expenses. Many will likely move to smaller apartments to save on their recurring expenses.

Avoid losing good-paying tenants by communicating with them to address problems they may have with the property. It is also not a bad business decision to strike short-term compromises to help them get through the economic hurdles. It can be a temporary reduction in the rent amount or the limited deferral of payments.

It would be better to keep tenants with good track records than to find new ones, who will likely end up defaulting on their obligations because of the prevailing economic situation. Besides, it will be very difficult to find new tenants when there is a recession or some other similar condition.

Seek government assistance

There are many government programs designed to help small businesses survive during an economic crunch. These include the Economic Injury Disaster Loan (EIDL), Paycheck Protection Program (PPP), and other programs administered by the Small Business Association (SBA). These can provide valuable support to businesses while the economy is still in bad shape.

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There is a reason why people and businesses pay taxes. The government is expected to provide assistance when times get rough. However, do not expect the government to cover everything. It would be wise to exert all the effort to avail of government aid programs, but it is preferable to plan things as if no aid is expected.

The still ongoing COVID-19 pandemic should have taught businesses that nothing is predictable and consistent. Serious tumultuous situations can happen without any warning, so it is a must to be ready and to have contingency plans for various possible challenges.

Sezer Sherif, Founder and CEO of investment group Vector Capital, explores the strengths of alternative property investment in the UK.

There is no question that COVID-19 has completely torn through the UK economy, with signs of initial recovery towards the end of 2020 largely dashed as the country continues to navigate through a third round of lockdown restrictions.

Yet, one sector that has continued to fair well despite initial and ongoing restrictions is the residential property market, with data from HM Revenue and Customs confirming an estimated 129,400 house sales in December 2020 – which was nearly a third (31.5%) higher than December 2019 and 13.1% higher than in November 2020.

However, according to a recent study by Citizen’s Advice, the same positive stats cannot be reported for the rental or buy-to-let sector, which found that almost a third of renters across the UK had lost income during the pandemic and 11% were in rent arrears. Furthermore, the number of private renters behind on their rent has also doubled over the last 12 months.

In addition to the challenge of rent arrears, landlords haven’t been able to generate viable yields on buy-to-let for a long time, with evolving landlord taxes resulting in an average annual return of 3.53% for the UK market; a figure even considered to be ‘over-performing’.

When compared to the projected returns and no hassle promise of property bonds, it is clear to see why hundreds of thousands of landlords are now selling up and reinvesting funds into the alternative market, with COVID-19 standing as the final catalyst for making this change.

Asset-Backed Investment, No Hassle

In brief, alternative property investment enables high net worth or sophisticated investors to invest funds into the construction of large-scale property developments, without the hassle of actually owning or managing it.

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By essentially ‘lending’ funds under a legally binding agreement, which usually comes with a fixed rate of return, investors don’t have to worry about managing tenants, finance or maintenance issues and instead reap a financial reward of between 6 – 10% for helping to fund the build – a somewhat significant increase when compared to buy-to-let.

Savvy Investors Diversify 

The COVID-19 pandemic has completely obliterated many investment channels in addition to buy-to-let, with the stock market having also taken a serious hit – something repeated when details of the new COVID-19 variants came to light.

However, the savvy investor has been circumventing volatile markets for years, particularly following the Brexit referendum several years ago together with political uncertainties overseas.

Although COVID-19 has taken investment challenges to a new level, it is these periods of uncertainty that force investors to think differently and to diversify their portfolio and investment decisions in order to make viable returns.

The alternative property investment market is one such route, and with construction not impacted by secondary lockdown restrictions, both developments and resulting returns are more likely to remain on track.

As it stands, there is no definitive end to the current COVID-19 pandemic. However, the initial pangs of panic have disappeared and there is definitely a stronger resolve amongst business leaders, developers and investors to fight back, disrupt and diversify, where one great place to start is with the alternative property market.

Research shows an increase in spending in Canada during the past decade, yet it has come to a halt as the economic repercussions of the pandemic continue to play out across the country and the world. That said, not everyone is spending (or not spending) their money in the same way. There are still some unique differences between the Canadian generations when it comes to spending, saving, and investing their money. Today, we’re going to take a closer look at millennials and their spending habits over one of the most tumultuous years in recent memory.

Millennials Are Still Making “Comfort” Purchases

Prior to the pandemic, the data showed that millennials spent more than all other generations on “comfort” purchases like clothing, streaming services, and going out to eat. For the most part, these spending habits have remained intact. However, due to COVID-19 restrictions, millennials are opting to get food delivered rather than eating at a restaurant. Though spending is down across the board, millennials are still making financial decisions that reflect their desire to enjoy their free time.

However, not all comfort purchases have stayed popular — or even possible — during the pandemic. Concerts and similarly crowded events have become more complicated with COVID-19 restrictions in place. Additionally, millennials have shown a greater aversion to travel than Generation X or baby boomers.

Millennials Rent More Than They Buy

Income inequality has become a hot button issue that often pits millennials against their parents’ and even grandparents’ generations. While living expenses have continued to rise over the last 30 years, especially in populous cities like Vancouver and Toronto, wages have stagnated. As a result, millennials simply do not have the capital saved to buy or even finance a home. Instead, they tend to rent apartments or houses — often with at least one roommate to cut down on expenses.

While living expenses have continued to rise over the last 30 years, especially in populous cities like Vancouver and Toronto, wages have stagnated.

In fact, many millennials don’t even have enough money to rent their own place. Though unemployment is steadily declining in Canada, the unemployment rate is still significantly higher than it was in 2019. This has disproportionately affected younger, less-established workers. With little savings and fewer job opportunities, many Canadian millennials are opting to live with their parents well into their 20s and 30s.

Millennials Are Paying Down Their Debt

Millennials are one of the most educated demographics in Canada, but this achievement came at a high cost. With average college tuition exceeding $20,000 per year, younger Canadians have no choice but to take on large student loans to get the education they need. With more and more Canadians acquiring some form of degree, higher education has become a necessity to remain competitive in the job market.

Thus, millennials spend much of their available cash paying down new or existing loans. Since Millennials have a propensity for spending their income on “comfort” or non-essential purchases, they also tend to lean more on high-interest credit cards. This has led to an ever-worsening relationship between poor spending habits and soaring debt for many young Canadians.

Millennials Invest In Smartphones More Than Anything Else

For many young people, a smartphone represents a gateway to the rest of the world. It is both a powerful tool to manage mundane tasks like bank transfers and phone calls, as well as a portal to the world’s collective supply of information. Millennials can learn a new language, start a business, or keep just keep in touch with friends — all on one device. As a result, millennials don’t mind shelling out a few extra dollars to upgrade their phones on a regular basis.

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However, it’s important to note that buying phones is not a completely practical act. Among Canadian and American millennials, there’s also a certain degree of “keeping up with the Joneses” involved. Though there are plenty of low-cost, functional smartphones on the market, a large percentage of millennials opt for more expensive models, even if it means adding even more to their debt.

Private rents in some of the UK’s largest city centres have fallen drastically in the wake of a post-pandemic exodus from major urban areas, according to new data from online estate agent Rightmove.

Rightmove’s latest rental trends report, released on Wednesday, showed that inner-city rents dropped by as much as 12% in Q4 2020 as tenants fled to the suburbs. Inner London was the hardest hit, with annual asking rents falling by 12.4% on average in the three months to 31 December.

Edinburgh city centre and Manchester city centre followed close behind London, their average rents falling by 10% and 5.3% respectively.

Further, all ten of the UK’s biggest city centres saw an uptick in the number of inner-city residents enquiring about properties outside their area. 53% of renters in Inner London asked about properties outside the city centre during Q4, up from 45% in 2019, while central Edinburgh’s proportion rose to 37% from 29%.

As a result of this migration, there has been a significant increase in properties available for rent in city centres. Vacant properties available in Leeds, Inner London and Nottingham have more than doubled.

“There's no doubt that higher rents will return once life goes back to some form of normality,” said Tim Bannister, Rightmove’s Director of Property Data, “but it will be the city centre properties with gardens and balconies that will be able to command the biggest premiums."

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Marc von Grundherr, Director of Benham and Reeves in London, said that the pandemic had reduced tenants’ willingness to commit to the high cost of renting in central London and other urban areas.

“At present, the vast majority of the capital remains closed for business,” he noted. “As a result, demand has fallen dramatically causing rental stock to flood the market. This excess level of stock means that landlords are being forced to accept dramatically lower levels of rent just to avoid lengthy void periods between tenancies.”

Many business owners who rent a commercial space are struggling or refusing to pay the rent. If this describes your tenants, you may be wondering if you can sue the insurance company to cover your costs.

So far, the pandemic has lasted for over a year, and there’s no end in sight. Eating a loss for months on end is not sustainable. After all, you may be depending on rent to pay your own mortgages. Read on to learn how some property owners are trying to get repaid for lost income due to the pandemic.

The Pandemic Is Disrupting Business and Rents

Many states are ordering shutdowns of businesses that have been deemed non-essential. Most businesses can not afford to go weeks without income. This is making companies try to back out of their rent. Some are claiming the virus as an act of God, which allows them to back out of the contract. Others are suing their commercial insurance provider.

Insurance companies are also denying coverage in many cases. They are saying the situation with the pandemic is out of their control. Others are saying that the damages are not physical. The way insurance companies make money is by avoiding large payouts. It is natural they are going to fight in court to avoid being sued by everyone.

Business owners and landlords feel their business insurance should cover their losses. Some have business interruption clauses in their contracts that should cover this. Insurance companies counter that the damages for COVID-19 are not their fault. They also claim the damages are too hard to calculate. This has resulted in a growing number of legal battles.

So Far No Landlord Has Won In Court

At this time, no landlord is known to have won a business interruption case that is related to the pandemic. Some legal advisors are recommending that business owners sue the tenant. Others are saying to work out a settlement or other arrangement. With so many small businesses closing due to the pandemic, you’ll have to consider the fact that it may not be so easy to get new tenants.

At this time, no landlord is known to have won a business interruption case that is related to the pandemic.

Thousands Of Cases Have Gone to Court

The failure or success of many lawsuits will depend on the states they are filed in. A court in Texas may rule differently than a court in New York. Experts say there are already lawsuits worth billions in courts.

These cases are being fought in state and federal courts. Some are claiming bad faith upon the insurer. Others have more creative legal strategies. There are promising cases in states like:

• New Jersey
• Missouri
• North Carolina

Some Cases Are Winning

There have been thousands of cases filed since the pandemic began. Insurers are playing hardball and seeking dismissals. Most of the cases are being dismissed by judges.

A few cases brought against insurers seem to be winning in court, though they haven’t officially been settled at this time. Some plaintiffs may have found a strategy that is working in court. Only time will tell.

Lawyers Are Arguing That the Policies Are Too Vague

The insurance companies are claiming their policies never stated they include viruses. Some insurance contracts have provisions called "all-risks" policies. Some businesses in Western Missouri made it to a jury trial. The judge ruled the physical presence of the virus met the requirements for physical loss and damage.

The key in these cases is to point out how ambiguous the language in the contracts are. Another strong strategy is citing the government orders as the damage. These are more tangible in a court's eyes than a virus.

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Some States Have More Open Interpretations of Physical Damage

A judge in New Jersey ruled that New Jersey state law didn't need physical damages. Plaintiffs cited an earlier case where dangerous gas made a packaging plant unsafe. They also cited a case where a downed power grid interrupted a grocery store.

Closure orders by the governor also helped them get a favorable ruling. Dangerous conditions that interrupted operations were enough to satisfy the court. There was a similar ruling in a North Carolina case. It ruled that being unable to physically access the property was a physical loss. This will be another way landlords and other businesses will likely take.

Closing Thoughts

This is a newer battlefield in litigation. Business interruption insurance is one of the main ways to sue insurance companies. Others may cite bad faith by the insurer.

Some cases are being won against insurers by other business types. Landlords should cite these as precedents, and read through as much information about legal options for businesses affected by COVID-19 as possible. The key to winning these cases seems to be citing ambiguous contracts, state law, and government mandates. These are the main ways cases have made progress in court.

However, directors should be aware of some important changes to the rules and those facing financial difficulties should waste no time in seeking expert support. Simon Underwood, insolvency partner at accountancy firm Menzies LLP, outlines what company heads should know about the Government's support going forwards.

The extension of the temporary insolvency measures put in place to protect businesses during the pandemic reflects the ongoing financial distress that many organisations are facing as the UK enters a second wave of coronavirus. Aligning with a general tightening of government rules, the step provides organisations with “extra time to weather the storm”, in the words of Business Secretary Alok Sharma.

Introduced in March, the original easements sent out a strong message to UK business managers, emphasising that the normal insolvency rules did not apply and that directors should focus simply on keeping their companies from going under. However, the Government’s decision not to extend its relaxation of the wrongful trading provisions indicates a significant change of stance. Directors who should have concluded that there was no reasonable prospect of avoiding insolvent liquidation but continue to trade could be liable for any losses incurred after 1 October, in the event that their business goes into liquidation. Directors in this position who are also applying for government financial support, for example, under the Coronavirus Jobs Retention Scheme, will also be more exposed to the risk of investigations from HMRC.

Businesses facing financial difficulties should also be aware that from December, HMRC will regain its status as a preferential creditor. This is particularly important for directors who have provided personal guarantees to banks or other financial institutions. This may result in the payment of higher sums under personal guarantees in the event of an insolvency, as financial institutions’ ability to recover their debts under floating charges is reduced. The fact that they will be able to recover lower amounts under their security is also likely to make them more risk-adverse when it comes to lending. This could make it more difficult for companies to secure this type of funding and cause banks to increase the cost of borrowing, both of which could have a negative impact on an organisation’s working capital.

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Announced on 16 September, the extension to Government’s commercial eviction ban will also help to provide many businesses with breathing space, protecting those that are struggling to pay their rent as a result of the pandemic from being evicted. However, it’s also vital to bear in mind the challenges this development poses for landlords, especially in the event that tenants have run up significant rental arrears. In the long term, closer collaboration between landlords and tenants and a fresh approach to rental agreements will be required to find solutions to tenants’ financial problems. For example, this could involve the ability for tenants to reduce the amount of space they’re paying for based on their changing commercial needs or switch to a turnover rent model, where rental payments are based on the turnover of individual business outlets.

For those experiencing pandemic-related financial distress, remembering that “cash is king” is key to avoiding insolvency. Three-way forecasting is an essential decision-making tool, enabling directors to calculate their organisation’s likely future financial position and take steps to address any cashflow gaps before it’s too late. This type of modelling involves combining data for the organisation’s profit and loss, cashflow and balance sheets, allowing ‘what if’ planning to be conducted for a number of possible business scenarios. As turnaround measures take time to implement, forecasts should be undertaken for at least the next two to three years. If cash projections indicate the lack of a viable financial future for the organisation, businesses should waste no time in seeking the support of an insolvency specialist, who will be able to suggest the steps needed to transform the company’s financial fortunes and continue trading.

The extension of Government’s temporary insolvency measures will certainly have bought more time for UK business owners and directors feeling the financial effects of the coronavirus pandemic. However, it’s important to note that these measures won’t be around forever and in order to future-proof their organisations, directors must take a proactive approach to strengthening their cash position. By using three-way forecasting effectively and getting expert advice now, businesses can improve their long-term performance and keep insolvency at bay.

Many landlords require their tenants to have renter’s insurance policies and will request proof of them before you sign your lease. Not all of them will require it, however. If there’s one thing to take from this article, it should be that all renters should have a policy in case something happens.

Renter’s insurance does more than protect property: it offers protection for costly circumstances that you may not be able to foresee. Renter’s insurance should be part of any savvy renter’s game plan. Knowing what renter’s insurance policies cover can help anyone decide how much they need, even though there’s no-set-in stone answer. Everyone’s situation is different, so their need for this insurance is different too.

What Is Covered by Renter’s Insurance?

If you’re wondering, “How much renter’s insurance do I need?” you need to know why people need these policies in the first place. The main reason people opt for renter’s insurance is to protect their property. Personal belongings outside and inside your apartment are covered by renter’s insurance, but that’s not all.

In the event that you have to leave your rental home or apartment for a while, renter’s insurance policies also cover your living expenses while you’re staying in another place. These circumstances may not be foreseeable and could include an infestation, a fire, or other damage. Living expenses can become untenable in these situations without renter’s insurance.

How Much Renter’s Insurance Should You Get?

The first step to figuring out how much renter’s insurance you need is to calculate the value of your personal possessions and compare it to your budget. At that point, you can compare the quotes of several insurance companies to the value that you calculate in your personal property.

From a policy as low as the average renter’s insurance plans, which cost around $15 per month, you can get tens of thousands of dollars of personal liability coverage and property coverage.

The first step to figuring out how much renter’s insurance you need is to calculate the value of your personal possessions and compare it to your budget.

What Types of Coverage are there?

There are three types of coverage included in renter’s insurance policies. To what extent a policy includes each type determines its value. These coverage types include personal property, loss-of-use, and personal liability coverage. Ask yourself: how much of each type does a typical policy contain? This is important to know so you can spot plans that are expensive for their coverage amounts and those that are a true value.

The average renter’s insurance policy offers around $30,000 in personal property coverage, 40% of the personal property’s value in loss-of-use coverage, and $100,000 in personal liability coverage.

Deductibles are another important factor when choosing a policy. If you don’t already know, a deductible refers to the amount of damage you have to pay for yourself before an insurance policy kicks in. These exist in healthcare policies and it’s no different for renter’s insurance.

An average or acceptable deductible for these policies would be around $500. These policies are considered the best value for those that want renter’s insurance for coverage but aren’t necessarily worried about a specific accident. Those that want a lower deductible should expect to pay a much higher per month premium.

The disadvantage of cheaper policies is that the deductible is much higher, which is fine until you have to pay it. There’s also not much of a drop in the price per month for losing 50% or more of your coverage amount. A few dollars less a month will lower your coverage amounts considerably. This is why policies priced at or near the competitive average are often the most desirable.

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The Takeaway

Renter’s insurance policies involve three different types of coverage, including personal property coverage, personal liability coverage, and loss-of-use coverage. Knowing how much renter’s insurance you need depends on the value of your belongings compared to the needs of your situation.

Since the value of renter’s insurance policies decreases drastically with only a small reduction in the cost per month, average renter’s insurance policies are often the most desirable. Use this information to conduct more research into available companies to find the right renter’s insurance policy for you.

From 13 May 2020, estate agent’s offices were permitted open and to begin viewings, in line with social distancing guidelines. People were allowed to move home. The construction industry was also permitted to begin building again, in line with government guidance.

Despite such steps, many commercial premises are likely to remain shuttered for some time to come. Those that do reopen may expect significant falls in turnover. The lockdown precipitated by the coronavirus pandemic has already pushed some businesses over the edge. Even as the lockdown measures are slowly eased, many commercial tenants may struggle to meet their payments. Landlords and tenants alike are now grappling with a radically altered economic situation and struggling to understand how it impacts their commercial lease arrangements. Richard Osborn, a specialist commercial property and property development lawyer at Excello Law, parses the new measures and their implications below.

The emergency Coronavirus Act, 2020 protects commercial tenants from eviction should they miss a payment in the three months after the measures were implemented. This means that no right of re-entry or forfeiture for non-payment of rent may be enforced in a commercial tenancy until 30 June 2020, at least. This protection can be extended up to six months. Landlords and tenants will be expected to work together to establish an affordable repayment plan when this period ends.

The government has put in place a raft of measures to help businesses weather the coronavirus crisis. Commercial tenants can avail of UK government loans on attractive terms in order to pay rent. The government’s £330 billion business loan package announced by Chancellor Rishi Sunak was specifically stated to be available for businesses to “pay their rent, their salaries, suppliers or purchase stock”. The Bank of England’s reduction of interest rates to a record low of 0.1% may help make existing loans more manageable. The government’s VAT payment deferral is estimated to have provided businesses with £30 billion in cash flow relief. Crucially, the government’s coronavirus jobs retention scheme helps businesses retain furloughed staff, which will help them to get up and running quickly once they reopen.

The government’s £330 billion business loan package announced by Chancellor Rishi Sunak was specifically stated to be available for businesses to “pay their rent, their salaries, suppliers or purchase stock”.

Despite these measures, many now fear a permanently changed commercial reality across the commercial property sector. Landlords of office premises are concerned that the massive moves towards homeworking necessitated by the coronavirus pandemic have proven a remarkably successful experiment for many businesses. Some major employers now intend to ramp up homeworking on a permanent basis, which may imply a long term reduction in the demand for office space. Likewise, the recent vast shift to online shopping is a serious concern for the retail sector. Many expect customers to continue shopping online in greater numbers, even after the pandemic passes. Concerns that the coronavirus pandemic may be causing permanent tectonic shifts in the commercial property market have increased anxieties across the sector. On top of this, most economists believe that we are already in the early stages of a major global recession.

Given this radically changed commercial reality, it’s no surprise that some commercial tenants are now actively seeking to escape their leases. Unlike construction and commercial agreements, however, commercial leases rarely contain force majeure clauses. Some commercial tenants are seeking to rely upon the legal concept of frustration to escape their leases.

In law, a contract becomes frustrated when something happens which is not the fault of either party, but which strikes fundamentally at the root of the contract. This event must be beyond what was contemplated by the parties when they entered into the contract. Further performance of the contract must be rendered impossible, illegal or it must make the obligations radically different from those contemplated by the parties when the contract was entered into.

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Frustration brings the contract immediately to an end. Both parties are relieved of any of any unperformed obligations. The Law Reform (Frustrated Contracts) Act, 1943 stipulates that money already paid is normally recoverable. However, if a party to the contract has incurred expenses, they may charge them to the other party. If a party who has gained a valuable benefit under the contract must pay a fair sum for that. Otherwise, the contract is brought to an end.

Frustration may appear attractive as a clean way to end a lease. However, meeting the legal test for frustration is onerous. Each case will turn on its own facts, and will depend upon the impact of the crisis upon the performance of the contract. Frustration may be arguable in cases where leases have only a short period to run, and where the business requires physical proximity – such as a hairdressing salon, for example. But even then, much will depend on government advice as it evolves. The government has issued advice on how to operate businesses safely for England. However, this is open to interpretation in terms of how might apply in practice to a given business. Some tenants may argue that compliance is impossible and that their leases are therefore frustrated.

Most standard commercial lease agreements oblige tenants to comply with statutory notices issued by competent authorities. In such cases, where the lease also contains a “keep open” clause, which obliges tenants to keep trading, the tenant will nonetheless be required to comply with overriding statutory notice to close.

Frustration may be arguable in cases where leases have only a short period to run, and where the business requires physical proximity – such as a hairdressing salon, for example. But even then, much will depend on government advice as it evolves.

The position is more complex where a commercial tenant is not ordered to close, but where they decide to do so in order to protect staff or customers - perhaps due to their judgment that the premises does not enable government social distancing guidance to be met. In such cases, where there is a valid “keep open” clause, it is open to a landlord to argue that the balance of convenience lies in favour of the premises being kept open. However, cases seeking damages for breaches of “keep open” clauses are rarely successful at the best of times. The courts are likely to be sympathetic to businesses closing to protect their staff and customers in the context of the coronavirus pandemic.

In this time of uncertainty, it is best for landlords and tenants to communicate openly and to work together collaboratively to resolve any issues that may arise. However, when complex issues do arise, professional advice should be sought.

While it is a matter for their own commercial judgment, it may be advisable for landlords to agree rent reductions where appropriate, to help their tenants to survive the crisis. Keeping existing leases going in a modified form may be far preferable to seeking new tenants in what may be a very difficult market. After all, none of us knows what sort of economy awaits us on the other side of the coronavirus crisis, or when the crisis will pass.

The COVID-19 virus is a global pandemic. With countries worldwide reporting cases, it is no wonder that it has greatly affected economies on a huge scale and reach. With more and more people confined in their homes, investors are now scrambling to come up with contingency plans to make sure their assets remain safe from it all. Of all the industries, the real estate sector seems to be the most affected. Hotels, restaurants, and retail stores are now empty.

Effect on Commercial Real Estate

In Asia, particularly in the hardest-hit areas, retailers are closing up shop. Retailers are being forced to send their workers home and stop operations. Restaurants, in the absence of customers, are left with no choice but to offer door-to-door deliveries or close as well. With travel bans in place, the usual busy areas of tourist spots are now deserted. With no sales, companies are forced to hold their wages and figure out how they will cover their monthly rent payments.

Rent Relief

Many businesses are now asking their real estate brokers like the Jeff Tabor group to negotiate rent relief and other forms of support to keep their businesses afloat. In Singapore, their restaurant association already requested shopping mall landlords to cut rents by at least 50% for the next three months. Some retailers have already granted relief measures including marketing assistance programs, flexible rental payments, and a rental rebate.

Effect on Residential Real Estate

Many think that the impact of the coronavirus should not extend to residential real estate. However, the effects are now felt within the residential sector as a number of home buyers are skeptical over fears of uncertainty - which is an expected outcome whenever something unusual happens in the markets. Fears about the virus caused the stock market to drop by over 1,000 points.

Real estate agents, however, believe that this is a good time to list their properties on the market. Uncertainty can sometimes equate to opportunity. Those who already have existing mortgages can negotiate to get the best deals possible. Based on the data provided by Black Knight, as many as 11 million homeowners can move to save more money through refinancing.

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Preparing for the Worst

Some of the malls in Singapore are slowly opening up shops despite the few numbers of buyers trickling in. Many believe that they have better chances of recouping what they have lost by continuing to operate. Nevertheless, they are still wary and are constantly finding ways just to break even and still provide goods and services. Restaurants are now offering food deliveries to doctors and nurses. Some of them are opening only when healthcare workers need to go out, take a break, and eat out. Right now, it is a give-and-take scenario.

The Bottom Line

Uncertainties can happen in the market. As we are experiencing, one crucial factor can affect the economy on a grand scale. In this case, the coronavirus or the COVID-19. With no known cure yet, real estate investors, home buyers and sellers have nothing to do but wait and see what comes of the virus and the real estate industry. For now, people should expect the worst and pray that their assets don’t turn into liabilities. COVID-19 could very well be the next Great Recession that we should brace for.

After weeks of being put under stringent lockdown measures due to the COVID-19 pandemic, people will be bracing for difficult days (or even weeks) ahead even as these measures are gradually lifted.

Even then, people need to make ends meet in one way or another. And while it is difficult to know how and when this crisis will actually end, it is important now more than ever to make good financial decisions.

Let's take a look at a few important tips for how you can keep yourself from going under in these difficult times:

1. Keep a Level Head

The coronavirus, which causes the deadly disease known as COVID-19, has permeated local and international news since it was first detected in China. Now, it has become a crisis that governments are desperately trying to contain.

If you have been following the news lately, chances are you have been on a spending spree for essentials. With quarantine measures in place, many are now finding it hard to stock up on the essentials like toilet paper.

It is easy to be confused with all the information out there regarding the pandemic. If you let your guard down and make unnecessary purchases as a result, you can do yourself a lot of harm.

Whatever happens, it's best to remain calm and follow government advisories. At this point, the best you can do is to prevent the spread of the virus and get updates from trusted news sources. This will help you gain clarity as you figure out what to do with your current resources.

Whatever happens, it's best to remain calm and follow government advisories.

2. Call Up Your Credit Card Company

Having a credit card is convenient, but when you are in the middle of a serious health crisis, you have to do what you can to get by.

Luckily, consumers in the US can breathe a sigh of relief as major credit card providers have agreed to waive payments for March and possibly beyond. All you have to do is to contact the number on the back of your card and ask your bank about how you can get relief.

It’s important to note that providers such as American Express and Capital One have allowed cardholders to skip payments without interest. Other banks such as U.S. Bank and Wells Fargo have also announced that they are offering to waive fees and provide other forms of hardship assistance. Again, you will need to contact your bank and see what they are offering.

3. Use Your Savings

This is a reasonable time to dip into your savings account.

Whether it's a time deposit account, notice accounts or a fixed rate savings account, it would be practical to use this money as a buffer to get you through the entire quarantine period. At any rate, ensure that you can withdraw the amount you need without any penalties.

4. Spend Less by Scaling Down or Discounting

So long as this crisis lasts, it is important to keep your spending to a minimum. This may mean scaling down on non-essential expenses such as streaming subscriptions and luxuries bought online. These are sacrifices you may need to make to keep yourself financially afloat in the next few weeks or until the crisis passes.

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Another way you can slow down the depletion of your hard cash reserves is to make full use of gift cards, loyalty points, and discount vouchers. These will really come in handy if you are going out shopping for groceries.

And considering that this is a national health emergency, you should consider making use of cards that help you pay less for prescription medicine. Check out prescription discount card details for where and how to find the best deals.

5. Leverage Mortgage and Rent Holidays

One good thing right now is that mortgage providers are offering different types of mortgage relief interventions for homeowners who can defer making payments through a 90-day period.

If you are in a difficult situation, it is best to contact your lender and see if you can strike up a forbearance agreement.

If you're renting an apartment, make sure to talk with your landlord to discuss new payment terms and see if you can avoid paying late penalties. Local governments are prohibiting evictions from taking place. This could give significant relief if you have been displaced as a result of the pandemic.

In such extraordinary times, you need to keep your finances from dwindling. This might take simple sacrifices or leveraging government aid efforts. In either case, your financial survival will depend at least partly on the measures you take.

Further to the Chancellor’s announcement regarding the mortgage industry’s support for homeowners who are experiencing financial issues due to COVID-19, lenders representing banks, building societies and other specialist lenders have come together to announce additional support for homeowners and residential landlords.

These include extending the option of a payment holiday of up to three months to residential buy-to-let landlords who have tenants who are experiencing issues with their finances, as either a direct or indirect result of Coronavirus, as well a three month moratorium on residential and buy-to-let possession action to start from 19 March 2020 helping provide customers with reassurance that they will not have their homes repossessed at this difficult time.

Commenting on the package of measures, Stephen Jones, UK Finance CEO, said:

“Monthly mortgage payments tend to be the largest outgoing for the vast majority of households and lenders want to reassure both homeowners and landlords who have tenants who may be affected financially that the industry is working hard to put measures in place to support them during these uncertain times.

“In addition to the industry’s support for residential homeowners, mortgage lenders are extending the same support to buy-to-let landlords who have tenants experiencing issues with their finances as a result of COVID-19 and the options include a payment holiday of up to three months.

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“For those customers already experiencing financial difficulty, lenders have also agreed a three-month moratorium on residential and buy-to-let possession action. The industry wants to reassure customers that they will not have their homes repossessed at this difficult time and therefore, these measures will start from tomorrow (19 March 2020).

“All customers who are concerned about their current financial situation should get in touch with their lender at the earliest possible opportunity to discuss if this is a suitable option for them.”

Robin Fieth, Chief Executive of the Building Societies Association (BSA) said:

"Building societies are acutely aware that this is a worrying time for those with a mortgage or who pay rent as both typically account for a significant proportion of household expenditure.  Now is a time for lenders to be flexible. The steps being taken by the industry today will offer some breathing space for those affected by the Covid-19 situation whether directly or indirectly.  The best first step advice remains to get in touch with your lender or landlord."

With the current average UK rent at £934 per month according to HomeLet, Bunk looked at what you can typically get for between £900-£1,000 and how it differs across the UK.

Studio flat, Brixton - £900 pm

Of course, £1,000 won’t get you much in London space-wise, but it will get you a studio flat in either South Kensington’s sought-after Gloucester Road, above Walthamstow’s famous Bell pub or in a gated Tudor style development in Brixton fit with a private pool.

One-bed terraced, Cambridge - £950 pm

In Oxford, you could secure a one-bedroom terraced house with scenic country views for £1,000 and in Cambridge you could also pick-up the same sized property for £50 less a month.

One-bed apartment, Granary Wharf, Leeds - £950pm

If you prefer apartment living, you can snap up a one-bedroom apartment in Gordondale House in Aberdeen, the Royal Parade in Bristol, the Mailbox in Birmingham, Granary Wharf in Leeds or the 32nd floor of the 47-storey Beetham Tower in Manchester.

Two-bed apartment, Mann Island, Liverpool - £950pm

If you’re looking to up your property potential and add another room, a budget of £1,000 can secure you a two-bed apartment in Liverpool’s waterfront Mann Island development, Nottingham’s historic Lace Market conversion, Sheffield's Victoria Quays, the unique Exchange building in the heart of Leicester, Clarence Parade in Portsmouth, a sea-front view in Bournemouth’s Honeycombe Chine, Cardiff’s old flour mill building Spillers and Bakers, Castle Chambers in Glasgow or Swansea’s Maritime Quarter.

Two-bed duplex, Oxford Street area, Southampton - £980pm 

Or, a similar budget would secure you a two-bed duplex in a grade-II listed building in Southampton’s trendy Oxford Street area, or a two-bed terraced with traditional features in Edinburgh’s Rosebank Cottages.

Four-bed terraced house, Lancaster Street, Edinburgh - £1,000 pm

Finally, for a budget of between £900-£1,000, you could rent a three-bed apartment in Compass House, Plymouth, fit with balcony and view of the marina, or a four-bed terraced house in Newcastle, close to Science City and the university.

Co-founder of Bunk, Tom Woolard, commented: “The UK rental market is home to a wide and wonderful variety of properties to suit all styles and it’s interesting to see just how the stock available differs when you take the same monthly budget and apply it to the various regional cities across the nation.

"Of course, you get a lot more property for your money when you look to the more affordable areas but that doesn’t mean you can’t find something with a bit of personality even in the likes of London, Oxford and Cambridge.  

"All too often, the speed at which property can let means that many tenants will settle for the first thing they find and are able to put a deposit on, but it can make a real difference to your life satisfaction in the rental market if you are able to find a property that you love to live in, rather than one you just choose to live in.”