The Rental Issue
w/c 10 August 2020
A subject that has fast risen up the ranks of hot topics this week is business rental costs.
Businesses traditionally pay their rent every quarter with the last two due dates hitting in the height of the pandemic in March and June. Thankfully the Government banned the use of statutory demands for payments which meant that those who could not afford to pay rent would not lose their premises during this time. But with this ban finishing at the end of September, the time for concern is now.
This isn’t to say landlords haven’t struggled too. They have their own costs to pay and with nearly six months of minimal or, in some cases, no payment that cost burden has been high. Take shopping centre owner Hammerson as an example. They have had a sudden collapse in rental income caused by enforced closures and are now seeking to sell off huge chunks of their business in order to survive through this crisis. But they have also taken this as an opportunity to solve the rental issue going forward. According to Hammerson’s chief executive “the UK’s historic leasing model has served its time...it is outdated, inflexible and needs to change.” It’ll be interesting to see the outcome of their investigation into a new flexible leasing approach which they hope will lessen the pressure on retail outlets. Will their new policy be a revolution that works for landlords and tenants? Only time will tell.
For the short term however a group of trade bodies including the British Retail Consortium (BRC) are lobbying the Government to further support businesses with the introduction of a Property Bounceback Grant. The scheme would see the Government paying half the rent of retail, hospitality and leisure companies for six months and could potentially save almost 400,000 jobs. With the Government having paid out approximately £160 billion already through reliefs, grants and loans is a further cost of £1.75 billion for these new grants possible? The job savings and temptation of an estimated £7 billion return in tax revenue from the economic activity it may generate might make it impossible for them to refuse.
If you’re looking to find the latest business support streams and guidance from the Government then head click here: ‘Coronavirus Support’.