Letter to the Communities Secretary of State about commercial rents

The Rt Hon. Robert Jenrick MP

Secretary of State for Housing, Communities and Local Government

18th June 2020

 

Dear Robert,

 

Commercial tenants - urgent action needed to extend eviction ban

 

We are writing to you as Brighton and Hove MPs and economic leaders to press you to act urgently to create a fair framework for commercial tenants beyond 30 June and to urgently communicate this to all involved.  Our city is known for its vibrant independent shops and businesses and we are deeply concerned about the future of many who are struggling during the current pandemic.

 

We recognise that Ministers have taken steps to support businesses and commercial tenants. However, there is very serious concern that tenants face a rent arrears cliff-edge on 30 June, when the Government's moratorium on evictions for commercial tenants who have missed rent payments is due to end.  We are aware of the new measures announced on 23 April and updated on 25 April to protect UK high street from aggressive rent collection and closure.  However, beyond stating that the moratorium on evictions is for 'at least' a 3-month period, there is no information about whether the 3 month period will be extended.  The main purpose of this letter is to call on you to make an urgent announcement to extend the commercial tenants eviction ban by the 9 months called for by the tourism and hospitality sector, or failing that, at the very least by another 3 months, as is the case in the residential sector.

 

Giving our high street shops and local businesses a chance to survive this crisis will require additional Government intervention to facilitate the non-payment of rent for a sustained period.  We have attached a copy of the recent report from the All Party Parliamentary Group for Hospitality and Tourism, Pathways to Recovery.  As you will note, the report sets out the strong support from within the sector for a continued moratorium on rents for up to 9 months, with details of repayment to be worked out subsequently with landlords. We want to underscore the finding that the closure period, sustained declines in trade and depleted cashflow means rent challenges are presenting a very serious threat to our local businesses. 

 

We are aware of the Government’s Corporate Insolvency and Governance Bill, and the welcome measures in it designed to address aggressive action by some landlords, such as banning winding-up petitions, statutory demands and Commercial Rent Arrears Recovery (CRAR) proceedings. However, as we understand it, as it stands, landlords can begin eviction proceedings as soon as the moratorium expires at the end of this month - this is totally unacceptable and deeply worrying for local businesses, some of whom are already receiving threatening legal letters from landlords.  Businesses need certainty of this so that they can plan their survival beyond the end of June.

 

We urge Government to create a framework for the future, so that a commercial landlord is only able to seek possession where they can show that they have offered the tenant one of a number of defined actions to help remedy the situation, but the tenant has refused to engage. Some suggestions that have been forward by the Federation of Small Business such as:

 

1.  Postponing the rent, and working up a repayment plan that spreads the cost over the remainder of the lease 

2.  Cancelling the rent for the months businesses are closed / in recovery, but increasing the term of the lease by the same number of months

3.  Rental reduction greater than 50%

 

 

There may well be other possible solutions that would be fair to small businesses and commercial tenants and their landlords that should be part of such a list.  For example, regarding suggestion 1. as we understand it the code of practice in Australia ensures that the cost of deferrals is spread over the balance of the lease term - or 24 months if that is longer.  We also understand that code ensures a freeze on rent increases during the pandemic period.  This is a measure that we also urgently ask you to consider and include in a UK framework.   

 

We know that a number of landlords are refusing to engage at all with businesses who are struggling. We would therefore also be interested in your views on giving discretion to judges in relation to Covid possession cases for commercial tenants.  We are aware that there are a number of tools commercial landlords can use to recover the property, but would welcome your assessment of this suggestion.  

 

As outlined above, we urge you to announce an extension as a matter of urgency and and then take the steps needed to impose good faith negotiating principles on both sides so that the burden of this crisis does not fall disproportionately on commercial tenants. Businesses and shops in Brighton and Hove, and across the country, need the Government to get behind a serious attempt to enforce collaborative working, in recognition of the fact that the pandemic period consists of closure, restrictions once re-opening is allowed that will affect business turnover, and a reasonable subsequent recovery period.

 

We should be grateful for your response to this letter.

 

Yours sincerely,

 

Caroline Lucas, MP for Brighton Pavilion

Peter Kyle, MP for Hove

Lloyd Russell-Moyle, MP for Brighton Kemptown and Peacehaven

Gavin Stuart, CEO of the Brighton Business Improvement District and Executive Diretor of the Brighton & Hove Economic Partnership

Olivia Reid, Consultant Blackbirdbox Ltd & Chair of Brighton Restaurant Association

Sarah Springford, Brighton & Hove Chamber of Commerce

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