Retail tenants and their landlords need to start talking and agree a basis for dealing with rent arrears as well as future rental payments now to avoid a catastrophic deluge of defaults once the moratorium on legal action is lifted, say leading tax and advisory firm Blick Rothenberg
Mark Hart, a retail partner at the firm said: “The British Retail Consortium has written to the Housing and Communities Secretary Robert Jenrick urging that the nearly three billion of outstanding rents are ring-fenced for another six months. With the moratorium ending on 30 June 2021 this is an issue that needs to be dealt with now. Delaying addressing the arrears by another six months just risks retailers kicking the can further down the road.”
He added: “In some respects retailers have the upper hand because landlords will not want to be faced with the void costs which include business rates and service charges if the tenant leaves. This is an opportunity for tenants to negotiate a deal based on affordability as we move out of lockdown.”
Mark said: “This is not simply a case of tenants good and landlords bad as the economy needs stable and sustainable landlords to invest in improving retail sites which will drive footfall.
“Now is the time for landlords and tenants to really act in partnership to create a sustainable business model which takes into account the current reality and works towards ensuring bricks and mortar retail remains a viable business model.
He added: “ Retailers need to consider the position of landlords, and how they can help them. Offering an extension of a lease in exchange for writing off some arrears, considering a turnover based rent or a mixture of a floor and capped rents should all be elements of a negotiation aimed at ensuring both landlords and tenants benefit from the arrangements and a stable financial position going forward.”
Mark said: “ While online has benefitted from the pandemic, the future of retail comprises all delivery channels and landlords and retailers must work to ensure it remains a viable reality.”