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WHSmith seek COVID clause in all new lease agreements

8th March 2021

High street retailer WHSmith have demanded a ‘COVID clause’ in any new leases and renewals, stating that this will become a standard feature of all commercial property agreements in the future.

Other notable retailers, including Poundland, have suggested that they will also be pushing for these clauses during any upcoming negotiations. These shops argue that, in the event of another pandemic, the burden of lockdown restrictions should be shared with their landlords.

In some cases, the clause demands that the landlord should reduce rent levels during periods of lockdown restrictions. Others demand that rent becomes linked to the turnover of the retailer during a pandemic.

WHSmith is rumoured to be demanding an even more straightforward variation of this clause. It simply states that, during catastrophic events like the coronavirus pandemic, rent should be suspended.

It is unclear how successful the retailer has been in achieving the inclusion of this new clause during new lease or renewal negotiations.

Businesses are unlikely to be successful in including such a one-sided clause, though it is clearly designed to provide the tenant with the greatest protection in the event that history repeats itself.

By contrast, a clause that links rent collection to turnover, during pandemic periods, may be more agreeable to both landlords and retail tenants.

In any case, all parties will hope that such a clause does not need to be triggered any time soon.

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