17 Aug 2011
Policy area: Town centre & Retail
The British Property Federation (BPF) and law firm Hogan Lovells have today issued a legally drafted letter that allows landlords to defer rent from SMEs affected by the riots.
Under many existing leases the tenant continues to be liable and could be in breach of contract if they do not continue to pay their rent. The letter shows landlords how to give affected businesses the chance to defer rental payment as they get back on their feet.
The Local Data Company (LDC) estimates that 48,804 shops, pubs, restaurants and clubs have suffered directly or indirectly in the 28 town centres affected by the disorder. Of these, independent outlets were hit particularly hard.
Ian Fletcher, director of policy at the British Property Federation, said: “While some retailers will have the benefit of insurance to cover the riot damage last week, others do not or may find it takes time to bring a claim and more generally to restock their business, which could leave them with significant cash flow problems.
“Where possible landlords may wish to offer small or medium sized traders the opportunity to defer rental payments as they get back on their feet, and we hope this letter helps steer them through that process.”
Mathew Ditchburn, Partner in Hogan Lovells' real estate group, said:
"In light of last week's extraordinary events, landlords may consider allowing some retails tenants to delay rental payments. Many who fell victim to the riots and looting have been unable to trade whilst they repair the damage and replenish stock. For smaller and independent traders it may be a while yet before their business is back to normal. This will mean large outlays for some that are difficult to absorb when there is little or no money coming in through the tills. In an economic environment that is already tough enough, no-one wants to see more people going out of business"