The survival of Britain’s high streets will be decided in “weeks rather than years”, as landlords and retailers plead with the government for more help.
The British Property Federation, the British Retail Consortium and retail property organisation Revo have united to send a letter to chancellor Rishi Sunak.
The letter warns that “many viable companies”, both retailers and landlords, will file for administration if the government does not introduce a rental support scheme.
“We have come together, as voices of both commercial tenants and landlords, to propose that the government introduces a scheme of rental support for the space that has in effect been furloughed, just as staff have been,” the letter said.
Further collapses will have a serious impact on landlords, including UK pension funds, listed companies and private investors. These are likely to be the next casualty of the crisis, according to restructuring experts.
The two industries want the government to support a “furloughed space grant scheme” where the state would cover the fixed costs of businesses that have experienced dramatic falls in turnover.
Under the proposals, eligible businesses would submit an audited forecast for the expected loss in turnover during the lockdown period from 24 March, as well as details of fixed property costs including rent and service charges.
The government would then meet costs on a sliding scale basis. This means 25% of costs would be paid by government for a decrease in turnover between 40-60%; 50% if the turnover decline is 60-80%; 80% for a drop in turnover between 80-99%; and 100% where a business is not trading at all.
Businesses and property owners would agree between them how to deal with any shortfall between the government’s contribution and the property costs payable, facilitated by the relevant lenders. The arrangements would not automatically supersede existing arrangements between landlords and tenants.
Similar schemes have been set up in Denmark and other European countries.
