COMMENT When the BPF launched Redefining Real Estate last summer, I had no idea that within a few months we would be facing a global public health crisis unlike anything we’ve seen in our lifetimes, and which is testing us all – as a nation, as businesses and as individuals – in a way we could not have envisaged or planned for.
I believe the way we behave during these extraordinary times will be remembered and we will be held to account – and as I look at the way in which our members are supporting their own people, communities, business partners and supply chains, I see much to celebrate and be proud of.
The commercial property industry manages the savings and pensions of millions of people across the country. It invests in and builds our town and city centres, our homes, offices, GP surgeries and the places where we love to spend time with family and friends. It is the physical fabric that enables productivity, economic activity and higher quality of life.
We are an essential partner to government and communities across the country in navigating the coronavirus crisis, and in rebuilding our economy and the rhythm of everyday life. We are playing our part – including being proactive in reaching out to our commercial tenants and seeking to support those who are vulnerable and most at risk, in genuine distress as a result of the impact of the virus and the necessary public health response. Our members are offering a range of flexible approaches to help those businesses meet their property costs.
We are taking responsibility. Notwithstanding this, the government has taken successive actions to take away all of the normal legal protections that underlie the fundamental relationship between a property owner and their tenants. We are already seeing its impact. Well-financed businesses that can pay but won’t pay rent, not only in the retail and hospitality sectors but also in offices and industrial, are walking away from discussions with their landlords. This is undermining our support and puts not only property owners’ businesses at risk, but directly impacts on their ability to support the truly vulnerable tenants and on the future of our high streets.
Play your part
The outlook for June is potentially bleak. Retail rents were down by about two-thirds in March, and other sectors such as offices were down by about a third. With no means of redress available to property owners, and government action widely (but wrongly) interpreted as sanction to not pay rent, there is clear and widespread evidence that tenants are choosing to conserve their own cash at the expense of others whatever their ability to meet their legal obligations.
Redefining Real Estate challenges our members and the property industry to step up. I have an equally simple message to our industry’s customers – if you can pay, you should pay.
You have a legal and moral obligation to pay rent, service charges and other property costs. We are all in this together. If you don’t play your part, then fewer of the most vulnerable will be able to receive support and there will be less money available to invest in local communities.
And, to the government, I urge ministers to be robust in reinforcing this message, and to call out those who protect themselves at the expense of the collective effort and those less well-placed.
Jewel in the UK’s crown
Private sector investment on a massive scale will be needed to rebuild the global economy and the UK must protect its competitiveness. UK real estate is one of the jewels in our country’s crown and it’s vital that the government maintains its reputation – not only to rebuild but also to deliver the levelling up agenda of regeneration at the heart of the government’s ambitions for the country.
Singling out the property sector for political action to fetter its legal rights risks undermining the attractiveness of UK real estate as an asset class and ultimately driving up the cost of capital. My second message to government is to take this risk seriously and do everything it can to mitigate the impact of its actions.
Many of us are property owners through our savings and pensions invested in property, and we rely on property to give us and our town centres and communities a secure future. We will all be held to account by our children and grandchildren for the role we played today in protecting their future.
Melanie Leech is chief executive of the British Property Federation
