Tensions between commercial landlords and tenants are bubbling up ahead of a crunch decision that will determine who foots the £6bn rent bill built up during the pandemic.
The British Retail Consortium said on Sunday that two-thirds of retailers in the UK are at risk of legal action on at least one of their stores, after a ban on evictions and debt collection from commercial tenants lifts on June 30.
The BRC warned that the ending of the ban could lead to the closure of “thousands of shops” if property owners push tenants for unpaid rent.
Kate Nicholls, chief executive of UKHospitality, said in the hospitality sector 40 per cent of businesses had not reached an agreement on rent arrears. “Once the moratorium is lifted, those [businesses] are most at risk and you would expect to see some legal action happening pretty quickly if agreement isn’t reached,” she said. “There is a real risk to businesses and jobs.”
However, landlords have hit back at these claims. “It is disappointing to see the BRC failing to recognise that the vast majority of property owners and tenants have already reached agreement on rent,” said Melanie Leech, chief executive of the British Property Federation.
“Let’s not forget either that there remain well-capitalised retail businesses exploiting the moratoriums, refusing to engage with property owners or pay any rent,” she added.
The salvo escalates a war of words that has run for the duration of the pandemic and comes at a critical juncture, as ministers consider how to replace the eviction ban that has been in place since March 2020 and navigate a course out of the rent debt crisis.
The government is considering six options, including a binding adjudication process for landlords and tenants who cannot reach agreement, lifting the ban only for certain tenant groups and simply letting the protective measures fall away entirely.
Landlord and tenant groups have submitted their proposed solutions over the past month.
British Land and Land Securities, two of the UK’s largest landlords, submitted proposals alongside the BPF. They argue that arrears built up since March 2020 should be ringfenced and tenants protected until the end of 2021, but that tenants should pay rent from the end of June as they resume trading.
The BRC is also calling for rent arrears, which it says have reached almost £3bn in the retail sector alone, to be ringfenced.
UKHospitality said the moratorium will have to be extended to give the government time to find a solution to the crisis.
Pret A Manger’s chief executive Pano Christou said negotiating with landlords was one of the most challenging elements of the pandemic for the chain, which has seen its sales plummet while office workers have remained at home.
He said almost 90 per cent of Pret’s landlords had given concessions to the business but the remainder were “trying to make things difficult”.