Landlords, shops and restaurants have joined forces to ask the Government to step in and pay commercial rents to help them survive the coronavirus pandemic.
Trade bodies have been in talks with ministers about proposals that would see the Government fund up to 50pc of rent and services charges owed by businesses in the retail, hospitality and leisure sectors. These “Property Bounce Back” grants would be targeted at businesses worst affected by lockdown.
It is estimated that about £3bn of rent owed to commercial property landlords for the six months to September will not have been paid, laying bare the acute pressures faced by landlords and tenants.
In a joint statement, the British Property Federation, British Retail Consortium, UK Hospitality, ukactive and Revo said: “Without urgent action on rents, many otherwise viable businesses are, through not fault of their own, at imminent risk of failure.
“Where both landlord and tenant are able to cover at least 50pc of the rent owed, and are able to demonstrate they are working together as economic partners, government should have the confidence to invest in these businesses’ futures and prevent the needless loss of hundreds of thousands of jobs.”
The Government has tried to support businesses by providing grants and loans that, in theory, could be used to pay rent. However, commercial landlords, many of whom are pension funds, were still owed 36.7pc of quarterly rent due on June 26 by early August, with similarly low collection rates during the second quarter, according to data published last week by Remit Consulting.
Retail tenants and landlords appear to be suffering the most, with only 50.5pc of rent due from retail properties for the third quarter collected 35 days after the due date.
There are also concerns that the Government’s suspension of evictions and winding-up petitions, to try to protect tenants, has prompted some tenants to withhold rent despite being able to pay.
Shopping centre owner Intu went bust in June, unable to withstand the effects of the pandemic on top of its long-standing huge debt pile.
Analysis commissioned by the trade bodies pushing for the Property Bounce Back grants claims that the estimated £1.75bn cost of paying 50pc of unpaid retail, leisure and hospitality rents for six months would be outweighed by the almost £7bn from tax revenue from sustained economic activity, and 375,000 jobs would be saved.
Ignite Economics, which carried out the research for the trade bodies, believes that many businesses unable to pay the rent will either close down or close some of their branches under restructuring.
Other countries have introduced taxpayer support for rent. Canada has provided forgivable loans to commercial landlords who agree to cut rents by up to 75pc and suspend evictions.
A Government spokesman said: “We recognise the huge challenges being faced by commercial tenants and landlords during this period, which is why we’re working closely with them to ensure they are supported and would urge both landlords and tenants to follow the example of others and find solutions that work for both parties.
“The Government has taken unprecedented action to protect jobs and livelihoods, with a package of around £160bn of support, including loans, rates relief and grants for businesses.”