COMMENT The government has again delayed a clear decision on the commercial rent moratoriums by issuing a call for evidence, seeking views on six exit options.
Alongside this, it published its supplementary guidance for the code of practice intended to provide a framework for property owner-tenant rent discussions. This guidance yet again makes it clear that tenants must pay service and other charges in full and as much of their rent as they can afford, and seek agreement from property owners where support is needed.
The code’s guidance also makes clear that where tenants have received government subsidies or reliefs that it must be used to help tenants meet their commitments such as rent and other property costs such as insurance, utilities and service charges.
How many more times do tenants need to hear this from the government? These are debts – and the onus is on the tenant to engage, be transparent, provide financial information and make the case for concessions. Yet I have lost count of the number of examples of property owners trying to reach out to tenants, only to receive zero response or a “take it or leave it” demand for concessions with little or no supporting evidence.
Sledgehammer to crack a nut
To any tenant out there who is fearful or unsure of how to engage with a property owner – no rational property owner will want to see failing businesses. Between rent freezes, waivers, deferrals and new payment plans, property owners have been providing extensive support for more than a year, and it makes little sense to let tenants fall at this final hurdle as our high streets reopen.
A wave of mass evictions is in nobody’s interest, including property owners. Property owners play a vital role in supporting businesses and creating living, thriving communities. Property owners do not want empty stores. A property with a tenant that can pay some rent, with a commitment to working with their property owner as an economic partner, is much better than an empty property.
The moratoriums are masking these truths – tenants have debts to pay or negotiate, but it’s a tenants’ market so property owners should not only want to help those in genuine distress but it is in their own interests to do so. Ultimately, there is a far greater alignment of interests than the popular narrative would have you believe – and that’s why we believe the moratoriums should be brought to a finish at the end of June.
It is good to see that this is one of the six options the government is consulting on in its call for evidence. What of the others?
Let’s remember that agreements have been reached already in the majority of discussions between property owners and tenants. So anything other than a lifting of the moratoriums risks being a sledgehammer to crack a nut – as well as rewarding poor behaviour and cutting across all of those agreements already reached.
The government is floating different versions of mediation and adjudication in the call for evidence. The starting point for these must be the code of practice and supplementary guidance – surely there is a clear enough signal in both of these for all parties to predict the likely outcome of such processes, so do they really need to incur further delay and expense to get there?
I hope sense prevails and the minority locked in stalemate can follow the majority’s lead, work collaboratively and forge a new and more sustainable future together.
Tell your story
The call for evidence also asks for further insight from individual businesses and their representative bodies.
Commercial property owners’ contractual rights have been suspended for more than a year, and this call for evidence is a critical opportunity to tell the full story of the impact on property owners – both large businesses and individuals. To date, the government hasn’t heard enough from smaller property owners, so the BPF has launched a countrywide campaign to enlist as many property owners as possible, and those who manage their properties, to join us in responding to the consultation.
High streets have been at the sharp end of the Covid-19 pandemic. Enforced store closures for non-essential retail, hospitality and leisure have brought genuine economic hardship, but the blanket moratoriums are giving tenants in all sectors – including offices and industrial – the ability to withhold rent and, in some cases, to refuse to engage at all with their property owner.
This exploitation – affecting the millions of pensioners and savers invested in commercial property – must end. UK property investment, which plays a vital role in supporting businesses and creating thriving communities and will be pivotal to town centre recovery from the impact of Covid-19, depends on this.
We are reaching out to all property owners and agents: help the BPF to tell your story.
Melanie Leech is chief executive of the British Property Federation
