The Commercial Tenants Association is calling on the government to use an alternative strategy to deal with commercial rent debt.
The communities secretary is facing new calls from retailers to encourage landlords to waive a minimum of 50% of rent debts that were built up throughout the pandemic.
The Commercial Tenants Association, which is a representative of over 500 businesses, has suggested that the government adopt a similar strategy to Australia to deal with the rental debt crisis. Under Australia’s rent relief scheme, it was made compulsory for landlords to agree to a reduction in rent, up to 100 per cent, relative to the reduction in the tenant’s business during Covid-19. The scheme required landlords to waive half of the total reduction in the rent payable and accept deferral of the remaining balance paid back in instalments over the remaining time on their lease.
Peter Bell, the founder and chief executive of CTA, has commented: “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’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.”
£6bn of unpaid debt has been accrued and has continued to grow since the government’s announcement in June that it would keep the moratorium on commercial rent going until at least March 2022. This was introduced to help failing businesses and stop landlords forcing out tenants throughout the lockdown. However, many landlords have become frustrated that big high-street retailers, such as Boots, who were still open during lockdown, have resisted paying their full rent, while simultaneously asking property owners for new rent deals.
The Commercial Tenants Association comments that rental debt from the first lockdown should be ringfenced until the landlord and tenant have come to an agreement. The body has said that landlords are required to offer rental relief of no less than 50 per cent and an offer must be accepted within 21 days before heading to arbitration.
Jenrick has already announced that arbitration will occur if an agreement can’t be made between the tenant and landlord. However, arbitration is a very expensive process.
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