A row has erupted between the biggest lobby groups representing retailers and landlords as fears grow that the government will dismiss pleas to help cover billions of pounds of rent arrears.
The British Retail Consortium (BRC) and the British Property Federation (BPF) united to urge the government to pay up to 50 per cent of commercial rents to help shops, restaurants and landlords survive the pandemic.
The proposal was designed to help pay an estimated £3 billion of rent owed to commercial landlords for the six months to September.
However, as hopes of government support fade, the retail trade body has broken ranks to call for an extension beyond the end of September of a moratorium on landlords taking action against tenants who do not pay rent. Helen Dickinson, chief executive of the BRC said: “In the absence of an alternative solution, the government should extend the moratorium. Without action, the job losses we have seen across the industry over the last month will be the tip of the iceberg.”
Melanie Leech, chief executive of the BPF said: “The BRC is calling for an extension of measures that are benefitting large well-capitalised businesses, many of whom grew their online businesses significantly during lockdown, at the expense of the millions of people whose savings and pensions are invested in commercial property.”
The landlord’s association said its members are prepared to support vulnerable tenants. However, it added that the blanket moratorium encouraged tenants who can afford to pay to withhold rent at the expense of property owners, many of which are pension funds. A blanket extension could cause some property owners to go to the wall.
Lenders have waived interest payments and covenant breaches during the crisis. Peter Cosmetatos, head of the Commercial Real Estate Finance Council, said attitudes were likely to change after September. “At that point you’ve gone beyond two quarters of forbearance, flexibility, waiving of covenants and lenders will be taking slightly more strategic views about who to support, on what terms, with what justification, and where to take action.”
Mr Cosmetatos urged the government to limit access to the moratorium to smaller businesses or those most severely hit by the pandemic. He said he was told in May that a more nuanced approach would require primary legislation, which would be too complicated and slow to bring forward.
He warned that a moratorium extension was not free for government. “It’s creating more indebtedness and stress and it’s just keeping your fingers crossed and hoping that more landlords and tenants between them will find a way to muddle through.”
A government spokeswoman said: “This government recognises the huge challenges faced by commercial tenants and landlords and we’re working closely with them to ensure they are supported. We’ve taken unprecedented action to protect jobs and livelihoods, with around £160 billion of support, including rates relief and grants.”
