Suspending commercial property evictions welcomed – but agreement needed on interest rate levied on late rent payments
The temporary ban on commercial property evictions is generally being seen as a sensible and pragmatic move, according to Simon Williams, Head of Real Estate.
However, Simon explains that the legislation should not be seen as an alternative to tenants holding discussions with their landlords.
“Whilst mass evictions are not going to help anyone, tenants need to do their part. They shouldn’t just unilaterally decide not to pay rent – they should contact their landlords and discuss what the alternative solutions are.”
Simon also highlights that the suspension does not affect any of the other provisions of the lease and, since most leases allow for interest charges for late rent payments (typically 4% or more above the Bank of England base rate), tenants should consider asking their landlords if interest is going to be levied in these circumstances.
“If you are a large corporate, with reasonable cash reserves, it may make sense to pay part of your rent bill to reduce this interest charge (if your landlord intends to levy it). After all, in this era of rock bottom rates, some entities might be able to borrow at a rate that is lower than the late payment interest charge.”
“Of course many landlords will have mortgages and this means that if their tenants are not paying their rent these landlords will need to engage with their lenders to see if they will grant a payment holiday to tide them over during this time.”
“UK businesses need to get through the next few months. This means working together and discussing the concessions and compromises that are going to allow all to survive.”