Dec

Small-scale commercial landlords being shafted by big corporates

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Some big corporate retailers, many of them large-scale international businesses, that have the wherewithal to survive the pandemic relatively unscathed, it seems, are taking advantage, given the disparities in size, to ride roughshod over small-scale commercial landlords.

According to a recent report appearing in The Times, Subway, Nando’s, Mr Dentist and furniture chain SCS have been paying some of their small-scale landlords little or no rent since March.

Taking advantage of the government’s moratorium on debt collections and evictions, these businesses, and they are not alone, have used the legislation to save cash against their landlord creditors, many of whom are now struggling.

It has been estimated by commercial landlord groups that around £4.5billion is now owed to landlords by commercial tenants taking payment breaks, and this figure is only likely to increase by the time the moratorium ends on the 31^st of March next year.

Much publicity has been given to the failures of tenants such as the Arcadia Group including Debenhams and Top Shop. They occupy large department stores owned by corporate landlords and pension funds who are themselves owed millions, but many other retail chains such as Subway, Nado’s and others occupy small high street stores, many of which are owned by small-scale local commercial landlords.

One such landlord asked The Times newspaper, “…would I go into their branches (Nando’s) and demand free chicken? Of course I wouldn’t”

“This is a complete abuse of the relationship between landlord and tenant and ignores the fact that most smaller investors like us have significant debt facilities that still require servicing regardless of their difficult trading trading conditions. This moratorium seems to be being used by large multinational businesses while much smaller single-outlet businesses are behaving far more reasonably.”

Another tenant, My Dentist, with 625 dental practices throughout the UK, said one landlord, “…had not paid a single penny… and refused all attempts at contact or to explain why they have not paid.” This, despite the fact the majority of their income comes from the NHS.

What’s the legal position?

Commercial property landlords have been prevented from evicting tenants or terminating their leases on non-payment of rent grounds under the government’s moratorium scheme since March the 23^rd. Nor can landlords instigate winding up procedures. The measures, which were originally intended as a three month emergency safeguard for struggling tenants, are now extended until 31^st March 2021.

Landlords and tenants have been told to speak to each other, and for tenants to “pay what they can” and negotiate a repayment plan. Ultimately the money is still due to these landlords for the missed rent payments, and it is still theoretically possible for landlords to go to court and obtain a CCJ with costs against a landlord that fails to engage in discussions.

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