Catalonian commercial properties affected by Covid-19 to benefit from rent reduction

The Catalonian government recently approved a decree which regulates rent reductions for commercial property.

Businesses will be able to seek a rent reduction if they lease a commercial or industrial property where, due to Covid-19 restrictions, business activity is suspended or the usable area of the premises is reduced.

They will receive a 50% reduction in rent and any other amounts owed if business is suspended entirely. If activity is only partially suspended, the reduction is proportional and will depend on the space and hours affected by the restrictions – ranging from a maximum of 50% reduction in rent to a minimum of 0%.

The regulation did not clarify how the reduction would be calculated.

The decree also allows tenants to terminate their leases early with one month’s notice in the event that the Covid-19 restrictions are in force for more than an aggregate of three months between 22 October 2020 and 22 October 2021. Early termination would be free of penalties, but the right expires three months after the end of any restrictions.

Tenants may require their landlord to use any guarantees provided, except for the deposit, to cover rent or any other payable expenses. The tenant will have to refund the guarantees within a year of the restrictions expiring.

The reduction will be applicable from the date a business requests it of their landlord, until the date when the applicable restrictions come to an end.

Real estate expert Luis Suárez de Lezo Landecho of Pinsent Masons also contributed to this article