Crisis in the commercial rent sector creating problem for landlords
A RELAXATION of payment regulation may have been a major help for commercial tenants during the pandemic but it’s created a massive problem for their landlords, a Sheffield expert has warned.
The government eased rent regulations to help struggling businesses at the height of lockdown.
It is estimated that up to £6 billion could be owed to commercial property landlords as a result of the pandemic.
But with relaxation of payment time now not scheduled to end until March 2022, Stephen Beverley, a senior manager with Sheffield business turnaround and insolvency practice Graywoods, says there could be a cash crisis ahead that has far reaching implications.
“Although commercial tenants have been given a break, that doesn’t help their landlords who are now unable to cover their own debts and commitments,” he explained.
“For well over a year now, those landlords have been struggling with this issue and for them, March next year must seem a long way off yet.
“It’s easy to imagine that there will be a tidal wave of court cases when payments become due and the only option landlord sees as viable is through the legal system.”
Stephen added that the end of the scheme would then create fresh problems for tenants who have been facing long standing financial difficulties.
“The government’s aim was simply to ease the pressure, not to write off a debt,” he said.
“Just because you have been told you don’t have to pay your landlord yet, doesn’t mean you won’t have to pay at all and when the times comes, landlords are going to be actively pursuing back payments.
“Companies that are struggling now when they don’t have to pay are storing up problems for later when they might be better advised to address the issue immediately, rather than burying their heads in the sand.”
Stephen added that the non-payment crisis could also ultimately spread into other areas.
“Many pensions are built around the property market and a crisis in the industry could mean that you may not get as much back in the future because of this,” he said.
“This is one of the many instances in which the pandemic will continue to affect us all in ways nobody has really given much thought to.”
This was posted in Bdaily's Members' News section by John Highfield .
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