December is supposed to be the busiest month of the year, but instead footfall is set to nosedive while many customers have already ripped up their Christmas party plans. The pandemic battle between commercial landlords and their tenants is about to get a lot more complicated.
Landlords would be wise to heed Boots’ advice and keep things as friendly as possible, especially if they are in a tussle with any smaller businesses facing another dark winter. Previous crises are evidence of how tough times tend to favour big landlords over smaller independents.
In the decade after the 2008 financial crisis almost a quarter of pubs shut, with small, independently owned firms bearing the brunt, according to data from the Office for National Statistics.
There have also been signs of hope in recent months for the country’s biggest commercial landlords as shoppers flocked back to the high-street. West End-focused Shaftesbury recently posted a smaller annual loss compared with the previous 12 months due to the boost in spending, while 10 brands agreed to rent shops from Covent Garden owner Capco only last month.
But the weary landlords most under pressure cannot be blamed for feeling like Ebenezer Scrooge this Christmas. Few would have expected the pandemic to last as long as this, and as cases rocket yet again hopes that goodwill shown now could be banked in a pandemic-free future may be starting to feel like a distant mirage.
Some have lost patience, complaining about tenants making profits while still refusing to pay rent. The shortfall of rent paid by commercial tenants during the pandemic is set to now exceed £7bn, according to Remit Consulting. Some of these landlords are small companies themselves, run by people once hopeful that their bet on the UK high street would lead to a steady income.
For now, the tenants struggling to pay are protected by a government ban on eviction and debt enforcement. That is set to be lifted next March. Although Treasury officials have said they are not offering any further business support in light of the “Plan B” restrictions, they will need to take action if this is the start of a miserable winter for business and landlords go on to have a field day come April.
When the ban was extended to 2022 earlier this year, lobby groups UKHospitality and the British Retail Consortium said it provided “much-needed breathing space” for businesses that have been hit hard by restrictions.
Nobody wants to look back on the next few weeks as the nightmare before Christmas. Although the balance between tenant and landlord has been fragile throughout this crisis, most commercial landlords have been understanding – an empty shop benefits neither side.
Yet with new restrictions and no extra support on the table, the fear is that the retailers, pubs and restaurants already struggling with mounting debts will not be able to cope. As anxiety rises and high streets face their latest challenge, the message Boots has fired to its pushier landlords will reverberate. It is easy to be friends in the good times, but we will not soon forget those who supported us in more difficult times.
