By David Byers
Measures meant to help ailing businesses are being exploited by profitable retail chains
Big companies that have survived the pandemic relatively unscathed have been accused of taking advantage of small landlords by refusing to pay their rent.
Commercial property owners said that Boots Opticians, the restaurant chain Nando’s, the dentistry chain My Dentist, the sandwich shop Subway and the furniture giant SCS have been paying little or nothing of what they owe.
Landlords said that the companies have taken advantage of the government’s moratorium on debt collection and evictions during the pandemic. The measures were supposed to end this month, but have been extended to next March, making it a full year in which property owners have been asked to supply premises without any certainty of receiving rent. Commercial landlords’ groups say they are already owed £4.5 billion by companies taking payment breaks or only paying a portion of their rents.
There has been much focus on struggling high street giants such as Topshop and Debenhams renegotiating their rents with the large institutions that own their premises, but other high street traders have smaller landlords.
Charles Wilkie-Smith, 68, and his son Hugo, from near Newcastle upon Tyne, own hundreds of commercial and residential properties, and claim that they have negotiated rent breaks or deferrals with smaller companies and tenants. However, they say they are owed £45,000 by Nando’s, which they say has failed to pay anything since the start of the lockdown for its restaurant in West Street, Sheffield.
Charles, a retired solicitor, claims Nando’s wrote to him in March to say it would not be paying rent. He says the company has not paid anything in nine months and refuses to provide a repayment plan, despite having reopened nationwide in June and offering takeaway services during the second national lockdown.
“Would I go into their branches and demand free chicken? Of course I wouldn’t,” Hugo, 40, said. “This is a complete abuse of the relationship between landlord and tenant and ignores the fact that most small investors like us have significant debt facilities that still require servicing regardless of their difficult trading conditions.
“This moratorium seems to be being used by large multinational businesses while much smaller single-outlet businesses are behaving far more reasonably.”
Another landlord, who declined to be identified, said he was owed £23,000 by SCS furniture, which is based in Sunderland. It paid him half his rent throughout the pandemic despite a lockdown boom in the interiors and home decor industry.
SCS said it wanted an “open exchange” with its landlords. “At the end of July the group had deferred £4.3 million of rent, all of which is to be repaid over the next 18 months.”
David Cohen, a small commercial landlord from Hampstead, north London, says he is owed £10,250 by a nearby Boots Opticians, even though the franchisee who runs the store has been paying the rent to Boots.
“We agreed a rent-free period from July 1 to September 30 to help the company during the pandemic, even though the shop was actually open,” David said. Since then he has asked for the rent, but did not get the money due on October 1 or November 1. “The rent paid by the franchisee seems to have gone into a black hole,” he said.
Last month Times Money reported the case of James Mitchell, 69, a property investor owed £9,585 by Subway, the sandwich chain, on his unit in Dalston, east London. The franchisee who actually ran the branch had also paid his rent, but Subway had not passed on the money. Once Money got in touch, the company settled the bill.
Some high street chains, including the fashion retailer New Look and Caffè Nero, a coffee shop group, have pushed through controversial company voluntary arrangements to eradicate some of their rent debts at the expense of property owners.
Adam Coffer, chairman of the Property Owners Forum, a group set up during the pandemic that represents independent landlords, said: “The big boys are abusing the moratorium the government has brought in. Landlords are not the pin-striped suit-wearing, cigar-chomping barons that they are made out to be. They are people saving for their retirement funds.
“The moratorium has to be Covid- related and for tenants who can’t afford to pay it is absolutely correct, and we have negotiated some fantastic deals for everyone concerned.
“Many big companies can fully afford to pay, but are simply taking advantage of the situation. Nando’s and SCS are trading their socks off. It’s not the responsibility of landlords to pay for them.”
What you can and can’t do as a commercial property landlord
● Commercial landlords have not been allowed to evict tenants or terminate their leases for non-payment of rent since March 23. Originally put in place for three months, the measures have now been extended until March 31.
● Landlords are prevented from ending leases on the basis of non-payment of rent. Nor can they issue winding-up proceedings against their tenants, who have been encouraged to speak to their landlords and to “pay what they can”, while negotiating a repayment plan.
● If a tenant is failing to engage with a landlord, however, it is still possible to seek a County Court Judgment (CCJ) against them, if the property is in England, Wales or Northern Ireland. If a tenant loses a CCJ case, they will be asked by the court to pay the debt off. If a CCJ is successfully brought against a tenant, they will be liable for unpaid rent and all the costs of bringing the case.
● The British Retail Consortium wants Robert Jenrick, the communities secretary, to add CCJs to the list of banned legal avenues for recovering debt during the pandemic.