RICS Response to call for evidence on Commercial Rents in England

RICS has responded to the UK Government’s call for evidence on Commercial Rents in England. Our response highlights that we support a sensible easing of the commercial rent moratorium. The existing measures on the commercial rent moratorium should be maintained for a limited period, with future protections specifically targeted at those small business tenants whose businesses have been directly affected by lockdown restrictions. Measures should be targeted as closely as possible to those tenants who are most vulnerable and in genuine need. In order to aid transparency, any tenant seeking rent reduction or abatement should provide in confidence all financial information that their landlord may reasonably require in order to make a fair assessment. Landlords should offer terms subject to the presentation of evidence about the tenant’s inability to pay.

We believe that where rent negotiations are taking place and where tenants’ businesses have been impacted by the pandemic, reduced rent for a proportion of the remainder of the lease should be offered and an agreed longer duration to pay off any arrears. Tenants who are able to make payments to their landlords should do so. A phased and targeted approach between landlords and tenants is appropriate in our view, especially where micro SME landlords or tenants have been impacted by lockdown restrictions.

We strongly encourage mediation and the avoidance of litigation where disputes arise, as mediation is a quick and cost-effective method for resolving issues and is well-suited to cases where there may be a variety of possible outcomes or solutions. RICS has been working with around 200 property professionals to design and implement a tailored mediation service to help landlords and tenants resolve issues arising out of the COVID-19 pandemic. The COVID-19 Commercial Rental Independent Evaluation Service is designed to ensure a clear, balanced dialogue between landlord and tenant, including an incisive analysis of the tenant’s grounds for non-payment and the landlord’s prerequisites for making concessions. The service also helps landlords and tenants to comply with the Government’s Code of Practice for commercial property relationships during the pandemic.