Covid-19 pandemic has put landlords and their tenants on a collision course as many businesses fail to pay rent due to inactivity caused by lockdowns.

While many have successfully renegotiated their contracts, others are bracing for legal redress.

Lockdowns imposed in March last year and in January this year, have thrown many businesses off balance. Some businesses have since closed before paying accrued rent arrears and others are hanging on by thread since they can't meet their rental obligations as well as other operational costs.

“The truth is that many businesses have failed to pay rent for reasons we as landlords also understand but this has not overshadowed their obligations to pay. Some tenants are negotiating with their landlords on way forward,” said a landlord in Kigali who preferred anonymity.

Although some businesses have braved the storms and continued operations, cash flow is quickly dwindling, while some are using financing from their banks to survive.

The hardest hit businesses are those in the non-essential category like clothing and footwear shops and companioes offering wedding services.

“Some businesses decided to terminate their contracts and close during the first lockdown before they accumulated a lot of rent arrears, a few are surviving on government subsidies, but some owe a lot of money in rent and are trapped” said Calvin Gahizi, from Rock Agency, a real estate company.

On the other hand, landlords are also between a rock and a hard place as many are servicing bank loans they are behind on payment, with some properties like Omega house having already gone under the auctioneers hummer.

“We have handled this issue on a case by case basis, some have asked for extensions, others have asked for a reduction while some completely failed to pay and asked for waivers” said a landlord.

Some landlords have, however, not caved to the pleas of their tenants, with the recent case being tenants of UTC seeking intervention from the government; while others are seeking legal advice on what to do.

Richard Balenzi, a commercial lawyer with Trust law chambers said there are challenges on both sides, as some landlords have loans to pay and rent is the only source of income, while businesses have also been greatly affected by closures.