EXPERTISE

Czech Republic: “COVID-Rent” programme

6 May 2020 – We would like to draw your attention to a “COVID-Rent” programme currently being drafted by the Czech Ministry of Industry and Trade (the “Programme”). Along with the existing Act no. 210/2020 Coll., which prohibits landlords from terminating leases due to arrears in rent payments, the Programme represents an additional measure that will have a major impact on tenant-landlord relationships.

The core idea of the Programme is to divide rental costs between three entities – tenants, landlords and the state. Under the Programme:

• the state would bear 50 percent of costs, landlords 30 percent and tenants 20 percent;
• the Programme appears to be intended solely for tenants of retail premises which had to be closed as a result of government measures;
• the subsidies can be requested for the period of the forced closure – the exact number of days will be specified by the applicant;
• there are two essential conditions for subsidy eligibility: (i) the tenant must pay the relevant part of the rent to the landlord, and (ii) the landlord must waive the relevant part of the rent;
• the maximum amount of support per tenant is CZK 20,000,000;
• the application process is yet to be determined – but presumably, landlords will be authorised to apply for the subsidy on behalf of their tenants (particularly in properties with multiple tenants, e.g. in shopping centres);
• the annexes to the application should be:
  
  
  1. a valid lease agreement entered into before 12 March 2020;
  2. account statements attesting to the payment of rent;
  3. an agreement between the landlord and the tenant on a rent reduction;
  4. a power of attorney granted by the tenant to the landlord (in cases where the landlord is the applicant).

Although the complete details of the Programme are not yet publicly available (and numerous modifications and amendments are anticipated), we recommend that parties already consider the potential benefits and mitigating effects of this Programme in their negotiations.

Naturally, we are ready to help in any ongoing discussions in order to ensure that clients maximise the options available under their lease documentation, as well as under the Programme.

For more information, please contact Klára Štěpánková, Partner, at .