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British Property Federation: Government Must Lift Moratoriums on Commercial Property Owner Rights

In the run up to the expiry of the current moratoriums on commercial property evictions and other enforcement action on 30 June 2021, new British Property Federation (BPF) data published today evidences that the majority of commercial property owners and tenants are working collaboratively – and fears of mass evictions, widespread legal action and aggressive landlord behaviour are unfounded.

With our high streets now open and trading, the Government should have the confidence to resume normal market conditions and lift the moratoriums – the moratoriums are now only serving to perpetuate bad behaviour among a small minority of the market, starve small property owners of income and inhibit vital investment in our town centres.

In a study of 16,320 retail, hospitality and leisure property leases across the UK, 50 per cent of rent owed from March 2020 has been paid, and property owners and tenants have reached agreement on a further 27 per cent. Agreements include new payments plans, waivers, and rent holidays and deferrals.

This means that only 23 per cent of rent owed since March 2020 remains unresolved, where property owners and tenants have not yet been able to agree how this debt should be managed.

The study includes both large professional property owners, such as REITs and pension funds, and smaller private landlords.

The study also uncovers that 14 per cent of tenants are currently refusing to speak with property owners, despite a proactive approach from property owners to work collaboratively and reach an agreement.

This group of tenants includes well-capitalised businesses who have traded throughout the pandemic, and are abusing government and landlord support by continuing to withhold much-needed rental income from the millions of pensioners and savers who invest in commercial property.

These tenants are not adhering to the Government’s Code of Practice – a framework for property owner-tenant rent discussions – which makes clear that tenants must:

  • pay service and other charges in full;
  • pay as much of their rent as they can afford; and
  • seek agreement from propertyowners where support is needed.

The Code’s guidance also makes clear that where tenants have received government subsidies or reliefs, this financial support must be used by tenants to help them meet their commitments such as rent and insurance, utilities and service charges.

Separate research by Remit Consulting shows that commercial property rent arrears since March 2020 have amassed to over £6bn – but with most property owners and tenants now working collaboratively to manage this, the BPF urges the Government to lift its unprecedented and damaging intervention in the normal rule of contract law.

The longer the moratoriums continue, the longer abuse will continue, which restricts support available to those businesses who truly need it. 

Each year, the commercial property sector provides £63.3bn in capital investment to the UK and £116.1bn to the country’s economy more widely (7 per cent of UK GVA) – and this investment underpins the creation of new, modern and fit-for-purpose retail environments, and will play a significant role in UK and town centre recovery. It is, however, being put at risk if government action continues to allow this abuse.

Melanie Leech, chief executive, British Property Federation, said: “The majority of commercial leases are now covered by agreements between property owners and tenants on how to manage rent arrears, with millions of pounds of support provided to vulnerable tenants and the retail property market re-setting fast. Yet well-capitalised businesses continue to exploit the moratoriums and pay no rent at the expense of the local authorities, pensions and savings funds that own the high street.

“Government must take action now, when most businesses are open and trading, to end this scandal.

“For those tenants simply refusing to engage – they must understand that rent arrears are debts and the onus is on the tenant to engage, be transparent, provide financial information and make the case for concessions. Property owners will continue to support those tenants in genuine distress.

“Nowhere else in the world has the property industry been subject to such punitive measures by a government. The billions of pounds looking to invest in UK real estate will be watching our Government’s actions closely as the moratoriums draw to an end at the end of June.”