Landlords are calling for the government to do more to tackle well-capitalised retailers exploiting lockdown as a rent holiday after new protections for tenants were announced.
The government yesterday banned landlords from issuing statutory demands or winding-up orders against retailers unable to pay rent because of the Covid-19 pandemic.
The protection is provided until 30 June, but could be extended. Legislation is also being introduced banning landlords from taking legal action to recover unpaid rent for the first 90 days.
Landlords have already been banned since March from evicting commercial tenants for non-rent payment for a period of at least three months. But some landlords have attempted to recover unpaid rent by issuing retailers with winding-up orders.
The latest government measure would “ensure the minority of landlords using aggressive tactics to collect their rents can no longer do so while the Covid-19 emergency continues,” said business secretary Alok Sharma.
The government is asking retailers to “pay what they can”. But landlords argue some well-capitalised retailers are already taking advantage of the emergency by halting rent payments they could afford to make.
The British Property Federation said it wanted the government to be more robust in ensuring that retailers that could afford to pay, did.
“Alongside extending additional protection to tenants, the government should be robust in encouraging landlords and tenants to work together and making clear that those businesses who are able to meet their liabilities should do so, for the long-term health of the complex funding ecosystem underpinning the UK’s economy,” said BPF CEO Melanie Leech.
Vivienne King, CEO of Revo, which represents retailers and landlords, said: “We know most owners and occupiers are taking the pragmatic view and working together in a constructive dialogue about rent obligations.
“However, the moratorium on evictions, while well-intended, has been exploited by some well-capitalised businesses as a rent holiday. A moratorium on winding-up petitions and statutory demands removes the incentive of last resort for property owners and there is every reason to fear it will also be used in the same way.”
The BPF, Revo and the BRC are calling for the urgent introduction of a ‘furloughed space’ scheme, whereby the government would make a contribution to rent in proportion to the drop in turnover seen by the retailer.
BRC CEO Helen Dickinson said of the latest measures: “Rents are a huge burden for retailers that must be paid even where shops are closed. We have raised this problem with government and today’s announcement protects firms who - during these extraordinary times - are unable to meet their rent obligations.”