Debt recovery restrictions on commercial landlords could lift as early as next month, warns retail law firm

As retailers welcome further restrictions on debt recovery from landlords, Royds Withy King’s Vicky Hernandez urges shop renters to prepare for   measures coming to an abrupt end 

“Institutional landlords and those with a public reputation to protect have largely avoided aggressive rent recovery behaviour. It is, however, the next tier of commercial landlords with little or no public face that are adopting increasingly aggressive attempts to recover unpaid rents.

“Retail and leisure occupiers will welcome this respite, but they should be prepared to respond when restrictions are lifted. This will probably be in May or June. Retailers should expect their landlords to continue to protect their own business interests and will need to be able to meet immediate rent demands. They will also need to have strategies in place to meet rent payments for the rest of the year. For many, this is likely to be challenging.

“Retailers are also finding themselves being pursued for unpaid rents on leases that they have sold on or transferred to third parties. These sales or transfers may have happened many years earlier and have been overlooked, adding further pressure. 

“Retailers need to check historic leases. Now more than ever, they need a good working relationship with landlords.  This is only achievable with open dialogue. We would urge landlords and  occupiers to speak regularly and openly about the challenges they face. This way they can try and reach a workable solution.

“Retailers will be returning with spring stock in store when they would normally be focusing on summer lines. They will need to dispose of old stock and are likely to face challenges in restocking. They are also likely to have to introduce social distancing measures at a time when landlords will be increasingly impatient.”

Vicky Hernandez is partner in the Real Estate team at Royds Withy King. Previous clients include AllSaints, Ladbrokes, Moss Bros, The Body Shop and Arcadia Group. 

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