3 June 2020
Undoubtedly, the COVID-19 pandemic has also affected the property market. The below overview of the measures taken by the governments in the Central and Eastern Europe prepared by real estate experts from Taylor Wessing may help you to understand the similarities and differences in the approaches taken by the individual countries.
If you are dealing with any of the stated issues or have any other questions connected to the current situation, please do not hesitate to contact us.
Yes, for leases of business premises: tenants are legally exempt from paying rent if the rented property can no longer be used due to an extraordinary circumstance such as COVID-19.
Only indirectly for residential leases: Landlords may not terminate solely due to non-payment of rent for April to June 2020 due to COVID-19. This prohibition applies until 30 June 2022.
Indirectly. Landlords may not terminate either commercial or residential leases where the tenants’ operation was restricted due to COVID-19 solely due to non-payment of rent for the period from 12 March 2020 to 30 June 2020.
Most likely no. Based on a general rule, tenants are exempted from paying rent if they cannot use the premises due to circumstances outside their “sphere of interest.” However, it is highly questionable whether the COVID-19 related governmental restrictions fall under this category.
Most of the restrictions have been lifted in May 2020. Accordingly, it is even less likely that the above-mentioned rule could be relied upon.
Possibly yes as for retail leases. During the COVID-19 related ban on operating in commercial facilities with a sales area of over 2,000 m2, the mutual obligations of the parties to the lease (tenancy) became “extinct.” The tenant must make a “statement of will” within three months after the ban is lifted in order to extend the agreement for a further six months.
Indirectly. The obligation to pay the rent does not cease to exist due to force majeure. However, until the end of 2020, landlords are not allowed to unilaterally terminate commercial or residential leases due to tenants’ default with the payment of rent or service charges due between 1 April 2020 and 30 June 2020. The tenant must prove that the default was related to COVID-19, although this does not establish relief from rent payment.
Yes, however limited to the tenants operating businesses relying on the physical presence of people (customers) such as gastronomy, retail, leisure &
entertainment, cultural establishments, public service providers (except for food, fuel, drugstores, communication and financial service providers).
No. There is no special aid fund for rent shortfalls of landlords, only the general state measures. If the tenant is a business, it is eligible to apply for a subsidy for fixed costs such as rent.
Yes. The government pledged to cover 50% of the rent payable during April to June 2020 (up to CZK 10 mil. per case) by the tenants whose operation was prohibited or restricted by COVID-19, subject to the landlord waiving 30% of the rent. Details of the programme are pending.
No, there are other funds generally available but not specifically intended for this purpose.
Not yet. However, politicians are continuously discussing a governmental rent refund programme, although no draft legislation exists yet.
Landlords may not claim or offset rent deposits until 1 January 2021. However, interest for rent arrears must be paid.
Evictions are to be postponed at the request of the obligated party in case of urgent housing needs and can only continue after the end of the emergency measures.
Fixed-term leases expiring between 30 March and 1 July 2020 can be extended until 31 December 2020.
Default interest for rent arrears in the period from 1 April to 30 June 2020 is capped at 4%.
Based on governmental moratorium, residential rent cannot be increased until the end of the emergency measures.
Leases in certain sectors (e.g. tourism, catering, sport) cannot be unilaterally terminated by the landlord until 30 June 2020, neither can the rent be
Evictions due to unpaid rent are prohibited.
Upon the tenant’s “statement of will,” the lease is extended by an additional six months and obligations due during the ban period become extinct. If no statement of will is made, all obligations for the period of the ban must be paid; the term of the agreement remains unchanged.
Depending on the economic situation of the contracting parties, anything is possible between amicable solutions (e.g. deferment or remission of rent) and judicial enforcement.
Tenants pursue negotiations with landlords aiming at rent relief or deferrals (including extended rent-free periods).
Landlords generally hesitate to agree to any relief given the uncertainty over the governmental incentive framework.
Tenants urge the renegotiation of rent payable during the period of the COVID-19 related restrictions, or even go as far as refusing to pay rent.
Some landlords offer relief in respect of payment obligations, but most insist on the original contractual terms, with occasional rent payment deferrals.
Tenants are trying to negotiate rent reductions for the period affected by restrictions until the end of the crisis; many tenants are terminating their contracts and closing stores.
Landlords are reluctant to offer rent reductions or other forms of financial relief. However, some are willing to negotiate new terms.
Tenants try to negotiate with landlords for rent relief and/or deferrals.
Landlords are generally waiting for possible government measures in this respect (potential rent refund framework and conditions thereof).
Typically, landlords reject tenants’ requests for an amendment (adjustment) of the lease terms, aiming to exploit their contractual privilege, except for businesses relying on the physical presence of customers (see above).
Landlords in gastronomy, retail, leisure & entertainment as well as other public venues are forced to negotiate rent discounts during the quarantine period on an individual basis.
Yes. A moratorium on consumer loans and loans to micro-entrepreneurs was imposed if the loan agreement was concluded before 15 March 2020. The debtor must prove that it lost income due to COVID-19 and that such loss affects its capability to pay.
The maturity of instalments due in the period from 1 April to 30 June 2020 is postponed by three months. There is no interest on arrears.
During the moratorium, the lender may not terminate the loan agreement due to default or deterioration in financial circumstances.
Any deadline for the use of collateral shall be extended accordingly.
Yes. Debtors may apply for a repayment moratorium expiring on 31 July 2020 or 31 October 2020 (the earlier expiry must be specifically applied for by the debtor) based on facility agreements entered into before 26 March 2020.
In case of commercial loans, the moratorium only applies to principal, not the interest.
An application must be filed with the lender and refer to the COVID-19 pandemic. The lender is not entitled to review any material criteria.
Yes. There is an all-encompassing moratorium on capital, interest and fee payment obligations under all commercial loan agreements and financial lease contracts until 31 December 2020. The moratorium only applies to loans granted by 18 March 2020.
As a consequence, the deadline for performance of the above contracts shall be extended by the duration of the moratorium.
Compound interest on unpaid interest accumulated during the moratorium is also prohibited.
No. But micro, small and medium businesses may apply to lenders for corresponding changes in the repayment terms loan agreement without having to examine the borrower's creditworthiness. The government announced that it intends to introduce several types of relief for debtors soon.
Yes. Debtors may apply for a moratorium of nine months (bank loans) or a total of six months (other loans).
The moratorium applies both to principal and interest.
Debtors may apply for the moratorium only during COVID-19 pandemics.
Yes, there are several packages of governmental measures. Whether and to what extent a landlord is entitled to the various funds must be examined in each individual case.
Measures include a subsidy for fixed costs, although it is not yet clear how this will be handled with regard to landlords. However, business tenants can
apply for the subsidy of fixed costs like rent.
Yes, both for funding and guarantees securing commercial loans.
No specific real estate related government funding is available.
There are no special funding programs for real estate lenders or tenants, but they may apply for financial support in the form of sureties and repayment guarantees for loans available for all businesses.
Yes. SMEs can apply for special (interest-free) loans and guarantees securing commercial loans.
No, however Ukrainian parliament has been recently processing a draft bill aiming to provide state support, inter alia, to small and medium enterprises, also involving governmental funding to specific industries.
Shareholder loans granted to resolve adverse effects of COVID-19 (which would normally qualify as quasi-equity) are ranking pari passu with senior debts.
Financial support schemes (loans and guarantees) and tax reliefs introduced by the government.
Entrepreneurs may receive financial support in the form of loans, leasing guarantees or other instruments. Assistance is provided based on a support
Entrepreneurs can also apply for employee salary supplements and funds to cover social security contributions.
Loan interest may not be increased during quarantine restrictions.
More generally, the following benefits are also provided:
Local councils may introduce exemptions from or payment extensions for property tax related to the business activities of certain groups of entrepreneurs whose liquidity has deteriorated due to COVID-19. The extension of the deadlines for payment of real estate tax instalments, payable
in April, May and June 2020, may not be longer than until 30 September 2020.
State-owned entities may waive the claim for rent or perpetual usufruct.
Tenants have been relieved from the rent payments for the state and municipal owned land plots for the period of March and April 2020.
Landlords have been relieved from the real estate tax on non-residential properties for the period of March and April 2020.