Tenants who want to stay in their premises, and pull their business back from the brink, need to engage with their landlords and not bury their heads in the sand, say leading tax and advisory firm Blick Rothenberg.
Heather Powell, head of Property, and a partner at the firm said: “ Tenants need to have a constructive discussion about what they can afford to pay in rent, and on what basis it should be calculated.”
She added: “ The Government guidelines for landlords and tenants emphasise a collaborative approach to these discussions and it is important that these discussions are had right now.”
“It is in everyone’s interest that retail businesses to thrive, but to do that they need landlords who are also thriving – a liquidator who is appointed by a landlord will only be interested in extracting maximum value from the property in the short term, which is very unlikely to be in the best interests of a retail tenant. Sensible, honest discussions now are key to the long-term success of both parties.”
Heather said: “ Large retail chains are entering into Company Voluntary arrangements, (CVA’s) which is a legally binding agreement with a Company’s unsecured creditors. This allows a portion of the debt to be paid back but these arrangements impose massive changes on the terms of the leases they have entered into with landlords.”
She added: “ Smaller retail businesses may not have landlords imposing these arrangements, but do need to focus on how they are going to pay rent, including all arrears, from October when the rent deferral scheme introduced by the Government closes.
“From October landlords will be able to start actions to evict tenant so tenants who want to continue from well-loved premises need to sort their rent out now, if they haven’t already.”
Heather said: “ Tenants must not assume that their landlord is going to be happy to accept any terms to avoid an empty retail unit. The planning changes announced in the summer give landlords opportunities to redevelop their properties that did not exist pre-lockdown, and some landlords may think these are a much better option than struggling along with an investment in a retail unit.”
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