Real Estate

UK landlords threaten legal action over non-payment of rent

UK landlords are threatening legal action against retailers and hospitality businesses after many withheld rent to save cash during the lockdown.

The Vietnamese noodle chain Pho, Escape Hunt and Caffe Concerto are among those that have been threatened with action. “We are facing a serious problem here,” said Stefano Borjak, director of Caffe Concerto. “They are trying to wind up the company, which does £40m turnover per year. The cash flow we have at the moment we need to pay staff.”

Caffe Concerto operates 37 sites in the UK but faces a winding-up petition — a court order that forces an insolvent company into compulsory liquidation — from Criterion Capital, owner of its Haymarket site, after it did not pay a £100,000 rent bill.

According to letters seen by the Financial Times, both Pho and Escape Hunt have also been threatened with action if they do not pay full rent for the next quarter to Sykes Capital, the landowner of their Reading sites.

“We appreciate these are difficult times, however, payment of rent should be one of the highest priority business expenses,” the letter said.

Sykes did not respond to a request for comment.

Andrew Sell, head of asset management at Criterion Capital said: “The government at no time has said that commercial tenants should receive a rental holiday, yet many, but not all, are choosing to withhold rent. Such action is jeopardising our obligation to meet our commitments to lenders.”

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Some landlords received less than a third of their expected rent on Wednesday after the government granted tenants a three-month moratorium against eviction for non-payment.

“Among all of the noise around withheld payments, all business tenants — including retailers — must understand that the emergency legislation rushed through by the government this week does not mean they can avoid paying any rent at all,” said Martin Edwards, property disputes partner at Shakespeare Martineau. 

Intu, the shopping centre landlord, said it had received only 29 per cent of expected rent, even after offering a deferral and cutting service charges.

“That rent is payable, that’s legally enforceable,” said Matthew Roberts, Intu’s chief executive.

Chris Griggs, chief executive of British Land, said that it was allowing its smaller tenants a rent-free period but that it had its own costs to pay. “Look at a very large shopping centre with very few shops open, you have to keep all of it running,” he said.

But tenants say that rent deferrals are not enough.

Natalie Williams owns a fashion business that leases a site from the City of London Corporation, which on Wednesday offered tenants a three-month rent deferral.

“Rental payments may be delayed, but our revenues will be lost, not delayed,” Ms Williams said. “The City of London Corporation’s refusal to grant requests for rent reductions or holidays is leaving business owners with no other choice than to consider dissolving the businesses they have spent years building,” 

She added that many other company owners faced the same problem.

“We are committed to providing well-targeted support to our tenants in these difficult times and will continue to review the measures in place over the coming weeks and months, in line with the government’s package of support for businesses,” the City of London Corporation said.


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