The UK government’s real estate response to the Covid-19 crisis compares favourably with that of other European countries, but lessons could be learned from other nations which have implemented more wide-scale state aid, according to one of the authors of an extensive report comparing approaches across the continent.
The real estate team at Squire Patton Boggs have released Covid-19 Government Measures in Real Estate, an in-depth look at how 10 European countries, including the UK, have addressed the pandemic.
Speaking to EG, David Holland, a partner in the firm, said that the UK government had performed “pretty well”, and in some ways had led the way in terms of measures introduced to protect certain businesses and in intervening in the relationship between corporate landlords and tenants.
Holland said: “The UK government has in many ways gone further faster than other nations, but in a slightly more targeted way for specific sectors rather than the blanket provisions that might apply in other states.
“The government was initially criticised for being relatively slow off the mark in announcing interventions, particularly concerning commercial properties and business interests.
“However, the provisions brought into effect in the Coronavirus Act 2020 are quite wide-ranging and in some ways quite innovative. The government has sought to strike a balance between targeting key sectors of the real estate sector, such as retail, hospitality and leisure, which might be said to be on the front line of the economic impact, with overarching measures, for example restrictions on evictions, which are more widely applicable.
“On the whole, it’s a pretty comprehensive set of measures, although there has been criticism made over whether further steps are required as the pandemic continues.”
Holland said that the UK’s approach has many similarities with that of Germany, but that lessons could be learned about providing more general availability of funding for businesses from countries such as France and Italy, where more direct forms of state aid have been implemented.
He said: “Some of the other European countries have had a firmer grip on direct state aid-type intervention. The likes of France and, to a certain degree, Italy have brought forward direct funding and grants available to individuals and businesses where they meet certain criteria.
“In the UK, a grant scheme has been introduced, but it is applicable only to the retail and hospitality sectors, and there are also one-off grants to small businesses with rateable values of under £15,000. There have been concerns raised that these grant schemes are too narrow and the timescales for accessing them has been delayed. Other countries are slightly ahead of the UK in terms of the extent of the grant funding that has been made available.”
He added that another consideration is whether the British government needs to “go further in intervening in the relationship between commercial landlords and tenants”.
Holland said: “While there has been a moratorium on termination of commercial leases for non-payment of rent, other enforcement options for landlords are available. There have been calls from tenants in various sectors for the government to go further.
“That will always be met by landlords, who face their own pressures, saying that would be a step too far. But the longer the pandemic goes on, as we move towards the next rental quarter in June, the pressure will only increase.
“The measures the government has taken have sought to bring landlords and tenants together to share the pain, but that takes a lot of goodwill and cooperation. The question that we will face, not just in the UK but other governments as well, is whether we will have to further intervene in that relationship. It is a tipping point.”
Click here to read Squire Patton Boggs’ full report.
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