Reduction in rent could help to revive UK cities

1st June 2021

There may be a tsunami of legal cases as landlords seek to recover rent owed from the pandemic, analysts have warned.

The coronavirus pandemic has led to several Company Voluntary Agreements – or CVAs – across the retail, leisure and hospitality sectors.

The recent legal rulings involving tenants who seek to avoid debts through CVAs are largely upheld by courts. Landlords are therefore under significant pressure to negotiate with tenants as a first step.

Rulings on CVAs will only deepen tensions between tenants and landlords, as both sides seek to find a solution to the debts that have amassed through the pandemic.

Landlords are not without options, but this is largely limited to threatening debt claims in the courts. We are having to use such threats to negotiate the best possible deals with tenants. Both sides usually want to find a way forward that helps the tenant continue to trade, and the landlord recoups some of the debt.

Everyone is eagerly awaiting the Government’s proposals for dealing with the “wall of arrears”.

We might see certain debts to be ring-fenced and a dispute-resolution mechanism put in place to impose a payment schedule. It is in neither parties’ interest to lose a trading relationship that was once profitable.

Landlords continue to face uncertainty over how the issue of rent arrears will play out over the coming months. However, there can be little doubt that our high streets will be transformed over the next year or so, but I hope that any reduction in rents will lead to a greater vibrancy in our towns and cities.

Need some guidance on recovering rent or tenant negotiations? We’re here to help – get in touch.

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