Saturday, June 19, 2021

End to commercial rents stalemate can help economic rebound – CBI

Occupiers and landlords of commercial property should partner on a path towards full economic reopening by taking decisive action to address commercial rent challenges, says the CBI.

The CBI believes commercial property tenants should resume paying rents as normal when emergency coronavirus legislation protecting businesses from evictions and statutory demands ends on June 30, except in cases of extreme financial difficulty caused by this year’s lockdown measures.

A CBI position paper proposes that firms in the hardest hit sectors should continue to be protected for a further six months, with companies which can demonstrate lockdown-related falls in revenue of more than 30% in 2021 given additional breathing space.

But with almost nine in 10 firms now open, continued government support for business costs and the easing of social restrictions, an extension of protections for commercial tenants should only support those in most need.

The CBI proposals aim to ensure the majority of occupiers are paying full market rents from June 30, when the current protections end.

The CBI also recommends that unpaid commercial rent debt accrued during lockdowns – up to June 30 – should be ringfenced and negotiated separately between occupiers and landlords. Many tenant-landlord relationships have reached satisfactory agreements on both legacy rent arrears and future arrangements.

The CBI proposes a time-limited extension of protections in relation to rent arrears, to encourage parties yet to reach agreements to arrange settlements which reflect the financial impact on both parties.

It also says the government should set out principles for binding arbitration on rent debt and ensure there is a mechanism to deliver decisions where negotiations fail or businesses refrain from negotiating. This could include recommended levels of ‘debt forgiveness’ based on the overall impact of coronavirus on businesses’ finances and a structure for repayment of arrears.

CBI Chief UK Policy Director Matthew Fell said: “With the success of the UK’s vaccine programme, a watchful easing of social restrictions and business confidence growing, now is the time to optimise commercial property interventions towards getting all parts of the economy back to business.

“The blanket government protections for non-payment of commercial rents should be lifted. While some sectors remain heavily restricted or fully closed, ongoing protections should be targeted towards the firms most at risk in these sectors.

“The conversation about commercial rent debt needs to be dealt with separately. There is a huge deficit in unpaid commercial rents, which both tenants and landlords acknowledge is unlikely to be fully recovered.

“The majority of tenants and landlords have already come together for adult-to-adult conversations to settle commercial rent arrears; those businesses yet to enter into negotiations should now do so and work hard to reach an agreement, or risk court decisions that may be less favourable.”

A message from the Editor:

Thank you for reading this story on our news site - please take a moment to read this important message:

As you know, our aim is to bring you, the reader, an editorially led news site and magazine but journalism costs money and we rely on advertising, print and digital revenues to help to support them.

With the Covid-19 pandemichaving a major impact on our industry as a whole, the advertising revenues we normally receive, which helps us cover the cost of our journalists and this website, have been drastically affected.

As such we need your help. If you can support our news sites/magazines with either a small donation of even £1, or a subscription to our magazine, which costs just £31.50 per year, (inc p&P and mailed direct to your door) your generosity will help us weather the storm and continue in our quest to deliver quality journalism.

As a subscriber, you will have unlimited access to our web site and magazine. You'll also be offered VIP invitations to our events, preferential rates to all our awards and get access to exclusive newsletters and content.

Just click here to subscribe and in the meantime may I wish you the very best.




Latest news

Related news

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close