The effect of COVID-19 on Landlord-Tenant Relationship

The aftermath of COVID-19 has resulted in unprecedented changes in how the real estate market operates, including the landlord-tenant relationship.

On a global scale, various countries have set immediate legal and fiscal policies to address highly vulnerable sectors such as tourism, real estate, and the likes. For instance, landlords suffer from problems, especially tenants’ payments on rent and property ownership. Countries like Singapore, the UK, Australia, and the Netherlands have imposed government grants and benefits, such as cash grants, tax rebates, extended payment policies, and even temporary delay of forfeiture on unpaid rents and properties.

While these measures prove to be tenant-friendly, landlords in other parts of the world struggle to keep their businesses afloat. They have seen some of the collecting mechanisms less favorable and quite damaging to their respective companies. Right now, landlords exhaust means to negotiate with tenants through adjusting rent payments in a given period. The landlords’ main goal is to find a balance between sustaining their earnings and supporting their tenants to maintain occupancy and income for a 

an extended time.

The Situation in Thailand

Similarly, the Thai government has also set policies to address the problems, particularly for tenants. 

Commercial tenants on government-owned property avail of discounts on rent and provisions for delayed payment sans penalty. There have been recorded instances of tenants whose rents were waived or discounted 50%

for two to three months to prevent imminent closure.

The issue appears more prominent among commercial tenants leasing on private properties. Without policies and other forms of government interventions, landlords and tenants negotiate the terms and payment changes among themselves. Private establishments offered rental fee discounts and waived payments to ensure leasees could still operate despite the economic turnout of the pandemic. 

While negotiations work well for landlords and tenants due to sustained business relationships, the Thai Civil and Commercial Code strongly recommends putting the agreement into writing. All evidence of lease agreement, including revisions, must be documented as a verbal agreement is not binding. A breach of agreement lease has caused recorded disputes, but legal measures may not be applicable without proper documentation. This process works for both landlords and tenants themselves.

The Bigger Picture

As there have been challenges on landlord-tenant relationships, the real estate market has seen vital issues. On a micro level, the long-term effect of modifications on lease payment puts the industry in a wary place. Such is the case of turnover-based leases. This mode lets tenants typically pay a smaller minimum-guaranteed rent added to a proportion of their turnover, resulting in landlords having difficulties making use of the income-earning property.

In general, created policies serves as temporary emergency measures amid global pandemic’s effects. Such leads to challenges in balancing the new structure, responsibilities, and support mechanisms to ensure the protection of landlords and tenants regardless of the industry. The goal is to ensure that these measures will be tested and carried over to usher in improvements for the real-estate sector in general in the long run.