EDITOR’S COMMENT: UKHospitality boss Kate Nicholls this week suggested the government extend the moratorium, again, and that landlords should “share the pain” with retailers. Share the pain? What on earth do you think they have been doing, Kate Nicholls? Sitting back and counting their cash in their skyscraper ivory towers?
UK hospitality may employ a whole lot of people, but guess who looks after us when we are done with employment? Guess who provides those places for hospitality to deliver jobs, and who puts roofs over our heads?
Real estate, that’s who. And if you look at the figures, real estate hasn’t just shared the pain. It has shouldered it. And it has had very little support along the way.
Hats off to Nicholls and UKHospitality for shouting loudest, playing a clever game with government and media and for tugging on those heartstrings, but now it’s time to listen to the truth.
Here are the facts.
Among just the FTSE 350, listed real estate companies have lost close to £7bn as a result of Covid-19, with a whopping £8bn wiped off the value of their portfolios. This is not fat cats’ money. This is pensioners’ money. A decent proportion of it fuelling government pensions. If government fails to support real estate and instead pours all of its support into the tenant sector, individuals will ultimately suffer.
Government has to hear this story and it has to listen. UKHospitality has had its plea heard. People are flocking back to pubs, restaurants and shops. We can all see that. The British Retail Consortium has played its sympathy card, with its claim that almost a third of retailers are facing legal threats from their evil landlords. But what about the other side of the story?
The British Property Federation has looked at more than three times as many leases as the BRC did in its research, and found that the majority of landlords have agreed plans on unpaid rent with their occupiers. It also found that some 14% of tenants are simply refusing to engage with their landlords, despite a proactive approach from them.
There is a sizeable group of tenants – well-capitalised tenants – that are abusing government support, are abusing landlord support, and quite frankly are abusing my mum’s and your mum’s pension, too. This means that no matter how heartfelt and jobs-focused UKHospitality’s or the BRC’s pleas for the moratorium to be extended again (and again) are, it just cannot be allowed.
The longer the moratorium continues, the longer the abuse will continue and the bigger the losses for property owners across the country will be. Bigger losses will cause the sector to shrink and will threaten the more than £60bn of capital investment the UK property industry makes every single year. At a time when our towns and cities are gasping for investment in a bid to be brought back to life after the most unprecedented 15 months, this investment needs to go up, not down.
“The government has chosen to overtly undermine the sanctity of income that investors would ordinarily expect to achieve,” LGIM Real Assets boss and head of the Property Industry Alliance Bill Hughes tells EG this week.
“The government needs to recognise the contribution that real estate plays in a productive economy,” he adds.
Government, along with retailers and hospitality and their representative bodies, also need to recognise that real estate has more than “shared the pain”. Now it deserves to share some of the support, too.
To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews
