Business leaders have called on the government to extend protection for the companies hit hardest by coronavirus when support measures are withdrawn and an eviction ban ends later this month.
The CBI, the UK’s biggest business lobby representing companies that collectively employ almost 7m people, proposes targeting support at companies with 2021 incomes that are 30 per cent or more below normal levels.
The CBI’s proposals are the latest intervention in a thorny debate about how to deal with billions of pounds of rent that has gone unpaid during the pandemic.
A moratorium on evicting tenants and a ban on landlords pursuing unpaid rent were introduced last March. In the intervening 15 months, many tenants have been unable to pay rent and a minority have chosen not to.
An estimated £6bn in arrears has built up and ministers are considering a range of proposals to navigate a crisis that has left landlords out of pocket and many companies on the brink of collapse.
Andrew Goodacre, the chief executive of the British Independent Retailers Association, said almost a third of his members had some form of rental debt.
“Our concern is that just as retailers are trying to rebuild their business, they could face forced closure due to actions taken by the landlord,” he said.
The CBI, which has considerable lobbying power and whose membership includes both landlords and tenants, is calling for the vast majority of businesses to resume paying rent from June 30, when the eviction ban ends.
“The government has been rolling the moratorium forward by three months every three months. With the vaccine rollout and the road map [out of lockdown], this is the moment for a line in the sand,” said Tim Miller, a senior policy adviser at the CBI.
But without further assistance from the government, companies in sectors such as leisure and hospitality risk collapse, according to the CBI. It proposes extending support until the end of the year for certain businesses.
As well as protecting the cafés, restaurants and entertainment venues that had to close during the pandemic, extending the ban on the basis of lost revenue, rather than sector by sector, would mean that businesses supplying them would also be helped.
Jonathan de Mello, equity partner at CWM Retail Consulting said the proposal could help retailers that have managed to keep revenues up business-wide by moving online.
Those tenants would gain extra protection under the CBI proposals if individual store revenues had slipped by 30 per cent or more, he said.
Demonstrating a revenue loss will mean businesses will have to open their accounts up to landlords, something many have been wary of doing in the past fearing how the information would be used.
But tenants would have to swallow their misgivings, said Miller: “The moratorium is protecting tenants from paying any rent whatsoever in some cases. It’s fair to ask for transparency to continue benefiting from that for another six months.” Landlords should demonstrate the effect of lost rent on their finances in return, he added.
The pandemic has increased the number of rental agreements that are linked to income, rather than the traditional fixed-rate leases. This has made retailers and leisure operators more open to sharing information with landlords, according to De Mello.
“[These proposals are] intended to support businesses that have a genuine viable future beyond the end of the pandemic,” said Miller, who didn’t rule out lobbying for further extensions in 2022, if businesses continue to struggle with coronavirus restrictions.