My Column

Opening up puts dent in the Rent Bill

  • Date: Monday 13th July 2020
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Many commercial landlords in Scotland will feel relieved as retail tenants start to reopen. From today, The Scottish Government has green-lit all non-essential shops inside shopping centres to open their doors again. That’s provided that they follow guidance on physical distancing.

Later this week we will finally see an end to those dodgy quarantine haircuts, as barbers and hairdressers are permitted to open from Wednesday – alongside cinemas and indoor hospitality.  

This will signal the start of a return to normality for retail landlords who have been as hard hit as the businesses who rent from them.

Reopening the retail sector won’t be as simple as flicking an economic switch to pre-COVID levels. Retail businesses have undoubtedly been amongst the worst affected by the global pandemic and their precarious situation has directly affected their landlords too. The future for retail looks uncertain.

Over the past week we’ve seen high-street stalwarts such as John Lewis and Boots announce job cuts of 5,300 between them. Fast food favourite Burger King will also be closing 10% of its UK units, leading to between 800-1600 job losses. All of this spells hard times ahead for landlords who will struggle to fill vacant units in an industry already blighted by reduced demand for commercial space thanks to online shopping.

It is important to remember that, like tenants, landlords will be experiencing significant cash flow problems. All of whom have their own financial obligations to meet.

For example, even though most commercial leases are drawn up on an FRI basis, which means the maintenance of the building is the tenant’s obligation, most landlords will have vacant property on their books. The landlord is responsible for the vacant rates and the property maintenance, which can both be costly. Relevant insurances aside, lower rental yields also mean less of a financial cushion in the event of expensive repairs or refurbishment.

I was not surprised to learn of a shocking report from Re-Leased last week, which found that landlords with retail properties were amongst the worst performing property businesses this quarter. They received just 13.8 per cent of rent owed, compared to the equally paltry 19.8 per cent the previous quarter.

The results of these disappointing figures can already be seen on the Scottish retail landscape. One of the UK’s largest retail landlords, intu, announced late last month that it was entering into administration after crunch talks with lenders failed. The retail landlord owns intu Braehead in Glasgow as well as Manchester’s Trafford Centre and Lakeside in Essex. The company received less than a third of total rents due in March and is likely to face a hit of around £180 million for the year.

Lockdown has brought with it dismal collection days for landlords and hindered many previously successful business agreements. Across the high street we’ve seen the likes of Matalan, Monsoon and Accessorize requesting three-month rent holidays. Fast fashion retailer New Look have entered into negotiations with landlords to switch to turnover-based rents – where the rent they owe is in proportion to the profits they make – to help cut back on property bills in the wake of coronavirus.

The Scottish Government has brought in measures to try and protect businesses leasing property from commercial landlords. Tenants, who have received a warning letter for non-payment of rent, have seen the period to pay their arrears increase from 14 days to 14 weeks, whilst the UK Government has banned landlords from evicting tenants to try and protect struggling retailers.

However, it all has a knock on effect for the commercial property businesses they rent from. I am concerned that these measures could be counter intuitive by encouraging tenants not to pay, even if they can afford to do so. For instance Boots, despite being allowed to stay open throughout lockdown, has allegedly continued to withhold rent payments. 

The overall projected impact for retail landlords is distressing. The British Property Federation predict that retailers alone owe rent worth £2.5 billion to landlords.  As such, commercial landlords operating in the retail space, will be looking forward to reopening.

Those businesses who depend on income from office space will have to wait a good few weeks until the can initiate recovery measures. Non-essential offices and call centres will not be able to reopen until some point after 31st July. So there are a few weeks to go before those businesses are likely to see rent from their assets appear back into their bank accounts.

Side (280 words)

Creative industries in Scotland are suffering greatly as a result of the COVID-19 pandemic.

Sadly, popular theatre, arts and live music venues were forced to close their doors at the beginning of the outbreak and will have to remain closed for some time.

Now, Scottish artists such as The Proclaimers, Texas, Simple Minds, Biffy Clyro and Primal Scream are calling for vital support from the Scottish Government to save the music industry.

The newly established Scottish Commercial Music Industry Taskforce has written to Culture Secretary, Fiona Hyslop, calling for more money for the music industry, clarity on arts funding and a timeline for venues reopening without social distancing.

It’s the first time that the music sector has ever collectively asked for support in this way – and it’s understandable why, with several businesses and institutions having suffered major financial blows.

I welcomed the recent announcement of a £97million investment for cultural, arts and heritage institutions from the UK Government, as well as the Scottish Government’s £10million package for performing arts venues.

However, the Scottish Commercial Music Industry Taskforce say that despite this funding, Scottish music businesses are still falling through the gaps.

This is evident in the fact that Glasgow venue, Subclub, had to make a public appeal for donations last week after bosses warned that the nightclub was at risk of closure.

Unfortunately, it isn’t the first Scottish business to have suffered at the hands of the pandemic and it won’t be the last.

I hope that in uniting to form the Scottish Commercial Music Industry Taskforce, music’s biggest names will help to make a difference in Scotland. With investment from the Government, a successful recovery can be made.

Laugh (130 words)

Motherwell has been mocked for having the worst beer garden in the country – and when you see the picture, you’ll understand why.

Social media users were quick to react when a photo of an outdoor seating area at the back of the Brass Button pub in the north of the town was shared online.

The funny pic of the ‘beer garden’ shows a car park area that has been roped off with chains close to a wheelie bin with a few chairs and tables scattered around.

I hate to admit it, but the photo gave me the best laugh I’ve had in weeks.

In hard times we have to make the most of what we have - but I dare say that wheelie bins are not the most attractive drinking buddy!

God loves a trier.

Weep (130 words)

I was concerned to see images of overcrowded bars and busy streets in England last weekend, following the reopening of pubs south of the border.

One picture from the Soho area of London showed streets packed with revellers with no visible social distancing.

Beer gardens have now reopened in Scotland, which is great news for business. However, I hope that Scots remember how important it is to continue to take precautions and stay safe.

When you’re out socialising and having fun, it can be easy to forget about social distancing. But it’s vital to stick to the rules in order to keep people safe.

Business owners have a part to play. I hope that Scottish hospitality owners take the necessary steps to ensure that they are operating a safe and regulated area.



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