The communities secretary is facing renewed calls from commercial tenants to force landlords to waive at least 50 per cent of rent debts built up during the pandemic.
The Commercial Tenants Association, which represents 500 businesses ranging from insurers to retailers, has written to Robert Jenrick proposing that the government adopt an Australia-style model to address the billions of pounds in rent debts.
Peter Bell, founder and chief executive of the association, said: “What we’re really calling for is for the government to impose a minimum of 50 per cent rental relief, in the form of a waiver to be agreed between the landlord and tenant. We think the government should be giving landlords some support with that.
“We’re hoping that arbitration is set up in a way that’s open, fair and transparent. We want to see a fair scenario where tenants are listened to and have an opportunity to present their financial position in private arbitrations versus going to court, which then becomes more public.”
The build-up of £6 billion of unpaid rent has continued since the government said in June that it would retain the moratorium on landlord action for rent arrears until March 25 next year.
The moratorium was put in place to curb a wave of business failures after the pandemic hit, forcing many premises to shut. There are growing concerns that a number of businesses will face a cliff edge when government support, including rates relief, VAT deferral and furlough is turned off.
Landlords have been frustrated that well-capitalised retailers including Boots, JD Sports and the Sports Direct owner Frasers Group have resisted paying their full rent since the crisis began while pushing property owners for new rent deals.
Retailers have pressed landlords for rent holidays while shops were closed but have also negotiated changes to contracts, leading to a rising number of chains securing turnover-linked rent bills to reflect lower store sales as footfall has yet to fully recover.
The Commercial Tenants Association recommends that rental debt from when the first lockdown was imposed last March should be ringfenced until a settlement is reached between landlord and tenant.
The association recommends that the landlord must offer rental relief of “no less than 50 per cent” and an offer must be accepted within 21 days before heading to arbitration.
Jenrick previously said that binding arbitration would be put in place if landlords and tenants could not agree. However, arbitration is seen as a costly process, while property owners argue that it would mean a third party interferes with a contract outside the courts.
