Taxpayers Could Ease Tensions Between Landlords and Tenants

Could furloughing be the answer for shops and restaurants?

Using the rest of Europe as a measuring stick for how the UK should respond to the challenges of the ongoing pandemic has so far proven to be pretty useless.

Each country has adopted its own strategies and implemented its own measures at different times, meaning that just because something has proven successful in one country, doesn’t mean the same successes will be seen in another.

Similarly, the economic state of each individual country, pre pandemic, must also be taken into consideration when different measures are considered.

The above is a bit of a caveat for the following proposed measures, that are currently under ‘serious review’ from UK Ministers and bosses, as a potential problem solver in the stand off between landlords and tenants across the hospitality, retail and leisure sectors.

One such measure, that has been applied successfully in Denmark, is the adaptation to the furloughing scheme to include commercial tenants, such as shops and restaurants, and more specifically, to allow taxpayers to help pay the outstanding amounts of rent.

The situation is pretty urgent, with commercial property owners set to lose billions of pounds by June, if nothing is done to address the impending shortfall in rent. The reason that these industries find themselves in something of a stand off, is due to the changes in the way that rent arrears can be pursued.

As we have covered in recent weeks, landlords have found their hands tied, as tenants have been quite rightly afforded extra time and extra protection during these unprecedented times.

The so called ‘space furlough’ scheme, would see landlords agree reduced rent payments with their tenants, whether they are independent bars and restaurants or national gym chains, with the taxpayer making up the shortfall via the Treasury.

On the face of it, this would allow more businesses to survive the pandemic, whilst ensuring rent is still paid.

A win, win?

It has worked in Denmark, but remember, what works in one place isn’t guaranteed to work somewhere else.

We will be watching this one with a keen eye over the coming weeks, as many of our clients will be as well.

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