Tycoons, property dynasties and moneyed investors have joined forces to found what must be Britain’s most unlikely trade union.
The collective, called the Landlords Union, wants the government to change tack on its rescue plan for the high street and the broader private sector. The group of 30 property investors say that tenants have been given carte blanche to withhold rents, choking off their main source of income. The high-net-worth property investors say that in effect they have been asked to provide a financial backstop for huge swathes of the economy.
Theirs is a motley group that spans some of the most colourful characters in the property world and scions of notorious City figures. The collective includes a former glamour model, the grandson of a financier at the heart of Britain’s most notorious insider trading scandal — and Simon Cowell’s brother.
The union’s main gripe is legislation enacted last month that bars landlords from using “aggressive tactics” to collect rent. It includes banning them from issuing statutory demands and winding-up orders on tenants struggling to pay bills because of Covid-19. It comes after the introduction of a three-month moratorium on evictions for non-payment of rent. Landlords complain that “unscrupulous” well-capitalised businesses are using the legislation as a “licence to not pay rent”.
“We think the government has opened the door to nationalising rent and has used landlords to underpin the cost of the commercial property support for tenants,” said Adam Coffer, 41, an investor in retail and leisure properties who is the Len McCluskey of the group. “The vast majority of landlords want to help those tenants who so desperately need it . . . but the government’s moratorium has allowed certain unscrupulous tenants to undermine this.”
The union’s roster is a Who’s Who of London’s commercial property sector. They could not describe themselves as brassic. Laurence Kirschel, 57, is a member. He’s worth an estimated £339 million and is best known for helping to regenerate Soho.
David Pearl, 74, also has signed up. He once appeared on Channel 4’s The Secret Millionaire and controls a £500 million portfolio that includes the property where the Hatton Garden heist took place.
Nick Cowell, 59, brother of media mogul Simon, is part of the group. Another member is Simon Lyons, 40, a London property investor whose grandfather Jack Lyons was convicted in the Guinness share-rigging scandal.
Their principle argument is that many of the tenants that have stopped paying rent could easily afford to do so. Travelodge, the budget hotel chain backed by Goldman Sachs, and Boots and Poundstretcher, retailers that have continued to trade during the lockdown, are among a multitude of occupiers that have told landlords that they won’t be paying their bills in full.
Mr Lyons, who is co-chief executive of Enstar Capital, which has a £100 million portfolio of properties around Notting Hill, Kensington and Chelsea, said that the ban on statutory action was a “disaster” and a “middle finger” to landlords.
He said that he was supporting smaller businesses that could not pay with rent holidays, but should not have to help companies such as Coral, the bookmaker owned by GVC Holdings, which has withheld rent. “Should I suddenly have to give Coral a rent holiday?” he said. “Seriously?”
Felicity Devonshire, 70, a former glamour model with a portfolio of retail, office and residential property spanning the country, said that rent collection was “not a complete shambles this quarter, but I think it will be next quarter”. She has put four of her company’s six employees on furlough, including her husband.
“We all run a company so we have money for the next quarter. It annoys me that Pizza Express and that lot are actually saying, ‘We are holding the money [for rent].’ We as landlords are completely people’s bankers.”
She said that she had smaller businesses such as hairdressers and a nail salon in her portfolio that she was trying to help and yet had paid rent. However, some larger businesses were a “joke. They have very good advisers who know how to screw people.”
James Burchell, 53, a member of the union who is co-founder of Tellon Capital, which invests in commercial property for private family offices, said that some of the bigger retailers had “demonised” landlords. During the good times, they had pocketed large dividends, but were now demanding forbearance on their rents, he said. “They are shamelessly hiding behind the government’s best intentions instead of adopting a ‘we’re all in this together’ approach.”
The British Property Federation, another membership organisation, said that retailers had paid only a third of their estimated £2.5 billion rent bill at the March quarter payday and it expected rental payments to “hit rock bottom” in June. Office tenants paid about two thirds of their £2.1 billion rent bill and that sum was expected to halve in June.
The collapse in rental income has spurred landlords into action. The union made its case for government support during a lengthy call with officials at the Ministry of Housing, Communities and Local Government. Many landlords have borrowed to buy their properties and rely on revenue from tenants to pay back their loans. If they cannot pay, the financial burden could end up on the shoulders of banks.
Mr Coffer wants the government to highlight the dangers of tenants simply ignoring rent, which he said would create a “bottleneck of debt”. He has asked for “unequivocal clarity from government that the vast majority of landlords do not fit their ‘aggressive’ reference and have and continue to behave ethically and sensitively . . . It is essential the ‘them and us’ mentality is eradicated, on all sides.”
The government appears to be recognising that Britain’s biggest commercial property owners, which also include pension funds and local authorities, may have been given a raw deal. Robert Jenrick, the communities secretary, and John Glen, economic secretary to the Treasury, held a conference call with the British Property Federation last week to discuss a deal that could include a grant scheme to cover some rent bills and a waiving of a tax on landlords with empty properties.
A spokesman for the housing ministry said: “We are very grateful to the sector for their support and contributions during this period and are urgently working with the sector and its representative organisations to ensure all parts are appropriately supported.”
Britain’s wealthiest property investors argue that the government needs to act soon because they cannot absorb the hit from a prolonged period of non-payment of rents.
Mr Burchell said that even a landlord with low levels of debt would struggle if their rental income disappeared, which in turn would lead to potential losses for lenders.
There’s no easy way out of this pandemic, it seems, for tenants, banks and even wealthy property owners.
