In the absence of a federal solution, Neuchâtel-based associations representing landlords and tenants, along with the cantonal government, have reached an agreement offering the parties involved a solution to resolve the issue of rent for commercial premises that were ordered to close as part of the COVID-19 measures. This balanced agreement is based on a shared burden among tenants, landlords, and the canton.

As a result of the restrictions imposed by the authorities as part of the COVID-19 measures, the commercial premises housing the affected businesses became temporarily unusable. As a result, many tenants lost an essential tool for their work for weeks and suffered an economic impact that made it difficult for them to pay their fixed expenses. It is in this context that questions have arisen regarding the enforceability of rent payments for these premises, giving rise to various conflicting legal opinions.

A shared commitment to finding a solution

Given the situation, the risk of numerous disputes arising over this issue has become very real, as the impact on both tenants and landlords is significant. To address this risk and prevent this issue from systematically ending up in court, the Neuchâtel-Jura chapter of the Swiss Union of Real Estate Professionals, the Neuchâtel chapter of the Swiss Tenants’ Association, and the Neuchâtel Real Estate Chamber have initiated a dialogue aimed at reaching an agreement. In this context, they have asked the Canton of Neuchâtel to join the discussions and help develop a consensus-based solution.
Although the canton’s discretion does not allow for the implementation of a binding decision regarding leases, the current lack of a federal solution has convinced the various parties that the establishment of this cantonal agreement is both necessary and urgent. The goal is to provide a clear framework for tenants and landlords to facilitate an amicable resolution. With this in mind, the partners set forth, in an agreement reached on May 6, 2020, a balanced solution that takes into account the interests of all parties and is based on a sharing of responsibilities among tenants, landlords, and the community.
All parties to the agreement have committed to promoting its provisions and participating in its implementation.

Purpose and Scope of the Agreement

The agreement covers commercial properties located in the canton of Neuchâtel and leased by tenants whose primary business activity was prohibited by a decision of the authorities as part of measures related to COVID-19. It establishes the rules for rent payments during the months in which closures were imposed by the authorities and sets forth the conditions for the canton’s contribution, made possible by the 2 million francs allocated by the State Council to cover this assistance.
The agreement covers the period from early March through the end of June 2020. It is based on two principles:

  1. During the mandatory closure period, effective March 17, 2020: 25% of the rent (excluding utilities) is paid by the tenant, 25% by the government, and 50% by the landlord. The rent amounts considered for this allocation are capped at 3,000 francs for tenants who were able to resume their business operations on April 27, 2020, and at 5,000 francs for those authorized to resume operations on subsequent dates set by the Federal Council. When the rent exceeds these amounts, the government’s contribution is based on these caps, provided that the landlord agrees to waive at least twice the amount paid by the government.
  2. Outside of periods of mandated closure: tenants are expected to pay rent as usual. The landlord is, of course, free to offer a more substantial concession.
    It should be noted that public entities that own properties are not covered by the agreement but are expected to make a concession that allows tenants to pay no more than 25% of the rent during periods of closure.

Processes and Tools

Given its non-binding nature, in order for the agreement to have a tangible impact, tenants and landlords are encouraged to enter into an agreement that incorporates its terms. To facilitate the implementation of this collaborative solution, a model agreement will be made available to tenants and landlords starting May 12, 2020.
Furthermore, to ensure the process is handled as quickly and efficiently as possible, the parties to the agreement have agreed on a procedure that involves the participation of associations, particularly during the application review stage. These associations will also provide support to the respective parties should any questions arise.
Finally, given the significant number of public establishments affected by the mandated closures, the parties sought to involve GastroNeuchâtel, which has agreed to provide its support and necessary expertise in cases involving public establishments.

Through this agreement, associations representing landlords and tenants, along with the government, are offering a pragmatic solution that takes into account the interests and circumstances of both commercial tenants and landlords. Together, the signatories to the agreement call for this approach—developed in the public interest—to be prioritized.

Additional information: www.neuchateleconomie.ch/loyers