The Financial Times has reported that landlords in the UK are threatening legal action as more and more of their retail and hospitality customers follow their US counterparts by withholding rent as the coronavirus crisis hits home.
Many landlords have received below a third of their usual rent after the Government said tenants would be granted three-months of grace against eviction for non-payment, leaving some landlords to complain that their tenants are not legally permitted to have what they’re calling a ‘rental holiday’.
Shopping mall landlord, Intu, received 29 per cent of the rent it was expecting, even after offering a deferral and cutting service charges.
British Land, also in keeping with some American landlords, is allowing its smaller tenants a rent-free period but still needs to cover its own costs as the majority of stores up and down the UK deemed non-essential are forced to close.
Forbes has already predicted that courts will be inundated with disputes between landlords and tenants, especially in cases where both sides have large liabilities and depend entirely upon consistent cashflow.
Whilst the UK Government has pledged significant support for the retail and hospitality sector, most notably via rents rebates, grant and loan applications could take months to process and businesses are currently focused on the immediate need to pay staff.
Many businesses which are fire-fighting now expect to go bust in the coming weeks and months, which will have a knock-of effect with landlords who might also be looking at a similar fate as their own income dries up. One company, Caffè Concerto, which has 37 branches in the UK, has been served with a winding-up petition, a court order used to force an insolvent company into liquidation, after failing to pay its £100,000 rent to Criterion Capital.