Matthew Peake of property consultancy Cluttons discusses the proposed Commercial Rent (Coronavirus) Bill
According to a report from Remit Consulting, as of November 2021 there was a £7 billion mountain of uncollected rent by landlords of commercial properties in the UK. Matthew Peake, partner and head of strategic asset management at property consultancy firm Cluttons says that much of this has been put down to landlords and tenants wrangling over the arrears that were racked up during the pandemic, with the British Property Federation estimating 20% of cases are yet to reach an agreement.
“As an advisor of landlords and tenants, there are examples on either side that have not represented either party well,” tells Peake. “Many of us will remember the stories about Burger King and other popular brands that were publicly lambasted for not paying rent to their landlords during Covid.”
A newly proposed Code of Practice and draft Commercial Rent (Coronavirus) Bill aims to intervene in situations where landlords and tenants have not agreed over how to share the arrears brought about because businesses were forced to close or operate under restrictions during the pandemic.
Several prominent property companies have recently come out with their collection figures, indicating a return to pre-Covid levels, with the likes of commercial property giants British Land, New River Retail REIT, Capital and Regional and Cadogan all highlighting a high rate of collection. Peake says this is welcome news, but predicts that many of these involved landlords who sat down with their tenants early on in the pandemic to work out a way forward.
Cadogan, for example, was an early adopter of turnover-based rents and restructured payment terms. “Having worked with the company, we know that the first thing they did when the pandemic struck was speak to each tenant individually to understand their circumstances – a move that ultimately led to their creation of the Business Community Fund which underpinned the recovery of many Kensington & Chelsea businesses,” Peake tells.
“As advisors, we have the responsibility to represent our landlords’ brand and values in any negotiation. We have seen the best of both sides in our dealings since the outset of the pandemic. We have also seen tenants who have performed excellently during the pandemic cite Covid as a reason not to pay rent on some of its best performing units.”
He says that, for the most part, the landlords who have done well have been the ones to actively collaborate, getting to know their tenants’ businesses and their challenges, and to work out a recovery plan together. “That’s what we would always advise. After all, in property, collaboration and transparency is key to commerciality,” adds Peake. “So yes, the new bill might be a gamechanger, but let’s hope it doesn’t have to be in the majority of landlord and tenant relationships.”
This was first published in Retail Destination Fortnightly. Click here to subscribe.