How Are Landlords And Tenants Dealing With The Menace Of Corona Virus?

With the entire country in a state of lockdown and relocation becoming an impossibility in these COVID-19 times, tenants, co-living and student housing firms are all in negotiation mode with landlords, trying to arrive at a consensus on extending existing rental agreements until the time the pandemic ends.

Recently, the central government decided to allow employees, who were due to vacate their official premises, to retain their accommodation for another 75 days until May 31.

The Noida Administration on March 28 passed an order asking landlords to collect rent from their worker tenants only after a month.

Delhi Chief Minister Arvind Kejriwal on March 29 asked landlords in Delhi not to force their tenants to pay rent for two to three months. He even went to the extent of stating that his government would pay rent if tenants were unable to do so.

With the coronavirus pandemic and subsequent lockdown affecting retail activities, Lodha Group has also announced full waiver for its retail partners until the retail operations restart.

YourSpace, a student housing company, is helping students who have decided to stay back, move to buildings they have decided to keep open. It is negotiating with landlords to offer a rent waiver at least until the time colleges are shuts due to the unprecedented situation. In some cases, it is asking landlords to extend the lease by a couple of months.

“It’s all on a case-by-case basis. In most cases landlords have been supportive. They understand that the market is depressed and may not be easier for them to get on board a new tenant in a lockdown situation and have in some cases even offered to take a rent reduction,” says Nidhi Kumra, co-founder and CEO, YourSpace.

“We have tried a mix and match of what works with each landlord. Some have virtually agreed to extend the lease agreement for three months, in some cases we have settled for a combination of no rent for two months but extended the agreement for two months. Some have agreed not to charge us anything for now but a higher rent post July. It is a zero loss situation for the landlords because let’s not forget some have to service EMIs with their rental income,” she explains.

Coming to the rescue of the stranded

Nestaway Technologies, a managed home rental network, has decided to commit up to $1 million in waived fees and service charges for new tenants moving into the over 6,000 units due to the coronavirus outbreak.

As cities are going through near lockdown, the company intends to offer its inventory of over 6,000 full houses and more than 4,500 private rooms across 19 cities in India to tenants, especially young professionals staying in PGs at preferential rates and under special terms until things return to normal.

Young people in PGs in cities are caught between a rock and a hard place during these times. On one hand, most of them are from small towns and can’t go back home as their homes may not have broadband to avail work from home. “In this situation, we want to be meaningfully helpful to them – we just slashed our one-time charges by a flat 50 percent for everyone moving from a PG to our homes. If things worsen further, we will work with our owners to make it further affordable,” the company said.

Ismail Khan, Chief Business officer, Nestaway Technologies, points out that most rental agreements have a force majeure clause inbuilt into them.

“We are trying to reach out to the landlords. We are not making a general request for rent waiver but looking at it on a case-by-case basis. To some we are providing an option wherein they can continue with 50 percent rent for now and then review the situation after three months; some landlords are open to a relaxation period for two months,” he says.

And how do they get the agreements registered? “All our processes are digitised,” he says.

For doctors and nurses who may have been forced to evict, he says that most of the properties held by the company follow a ‘No Touch Move-In’ concept which means that the tenant can simply move into the property he likes by unlocking a smart lock installed to the property online.

“A tenant can book a property online, get an agreement online and move into the property with ‘no touch’ involved.  We’ve received bookings from doctors and nurses who have been stranded for this product. We are giving waivers to all such people – those who have been stranded or evicted from their houses,” Khan told Moneycontrol.

Vinayak Agarawal, Co-founder and CTO, myHQ said the concerns over COVID-19 have led to reduced footfalls at their workspaces. “But we believe this blip is temporary and will only last till precautions are deemed necessary. We aren’t seeing any decrease in our immediate revenues. In case the situation becomes more alarming and persists beyond April, there might be a decrease of 15-20 percent in the short term revenues,” he said. None of the company’s clients has so far reached out to opt out of long-term agreements citing the COVID-19 situation.

Landlords agreeing to extensions online

Saurabh Garg, co-founder and CBO, NoBroker.com, says that most landlords have virtually agreed to extend the rent agreements by three months. “This is an extraordinary situation – it’s impossible for tenants to move out and difficult for landlords to get a new one,” he said.

Registering fresh agreements is also a challenge in these times, especially in Maharashtra where a tenant and the landlord have to get a biometric test done and link it with their Aadhar card.

“People have to visit the registration office to complete these formalities. Even though NoBroker has enabled online rent agreements, the last-mile visit to the registrar’s office is a must. In a lockdown situation, this has been suspended. Both parties are now mutually deciding to do it post the lockdown, deciding on the terms and agreements for now and saying they would sign the agreement later,” he explains.

Nitin Jain, a real estate broker at Prudential Realtors, says that most people plan to relocate or shift during Navratras but that activity has come to a halt this year on account of COVID-19.

“Most of them are stuck. Relocation companies too are shut. In such a situation, tenants are requesting for extending their lease agreements until the lockdown is lifted with a 15-day grace period. This is being agreed to between the landlord and the tenant online,” he says, adding commercial space tenants are asking for rent waivers as their businesses are shut on account of the lockdown.

Anurag Mathur, CEO, Savills India, says that the situation is akin to any other sector which have taken a hit because of the pandemic and subsequently the lockdown. “While we cannot say for certain how it will play out in terms of rentals both in commercial and residential, what we expect is that rental agreements which are up for renewals in the immediate future may get some grace periods. Landlords may agree to extend leases as these are uncertain times for everyone,” he says.

A Delhi-based landlord told Moneycontrol that this is a “two-way street. There has to be trust between the landlord and tenant, especially in times like this. I would not refuse to extend the lease further till such time the problem persists and a solution is found. Nobody would be able to buy stamp papers at this point in time. Extensions have to be mutually agreed to. Trouble is at both ends and it would be foolish not to consider an extension.”

What’s the legal recourse?

As renewal of existing rent agreements (lease or licence) to extend its ‘tenure’ is contractually driven by the parties, it is possible to extend the term of the agreements which are due to expire, for a shorter period like 3-5 months, even during the ongoing national lockdown.

The parties will have to mutually agree on such extension/renewal (unless the existing agreement contains a renewal provision) and draw up a simple fresh agreement for the extended term. Considering the current crisis and future uncertainty, landlords are likely to agree for an extension, say legal experts.

Considering physical meetings are not possible under the current lockdown, the fresh agreement can be executed electronically by the parties, says Kunaal Shah, Partner, Trilegal.

This agreement will have to be stamped upfront prior to signing. In this regard, the online stamp duty payment portals continue to remain active in most cities, he said

“In terms of registration of the fresh agreement (if required) – applicable registration law provides for a four-month window (with an additional four-month grace period) for completing the registration formality. Accordingly, registration of the fresh agreement can be completed within the aforesaid timelines, once the present lockdown is lifted and the concerned sub-registry offices start functioning normally,” he adds.

(Source: Moneycontrol)