The London Property Alliance has written to the chancellor, on behalf of London landlords, to press for more flexibility from banks and lenders amid the coronavirus outbreak.
The membership body, which represents 400 property companies across the capital, is calling for the UK government to help enable landlords to withstand the cut in rental income, and allow them to be flexible with retail occupiers.
“In response to the unprecedented Covid-19 crisis, our members are rightly being called upon to provide as much flexibility to their tenants as possible in order to avoid permanent closures and protect jobs”, the letter addressed to chancellor Rishi Sunak reads.
“We fully support this effort and responsible owners all over the country should be supporting their tenants during this difficult time. Where possible, they are providing rent deferrals and rent holidays, especially for small business occupiers and across the retail, hospitality and leisure sectors. The property sector is also providing emergency key worker housing, car parking spaces and space for urgent NHS use, storage and logistics.”
It adds: “However, despite the government’s immense efforts on financial support to business and the pace of delivery, the same message around flexibility is not being made to the finance sector. Many property companies are constrained in their ability to show flexibility to their tenants without breaching debt covenants and loan obligations, thereby risking their own assets, credit ratings and survival prospects.”
As a result, the alliance is calling for “unequivocal political support and a concerted effort to ensure the finance industry” is ”explicitly advised” to grant property owners the flexibility they require to support British businesses and help safeguard jobs.
The body has detailed three key requests to consider as a matter of priority:
- Financial flexibility: The “strongest possible“ political support and government guidance to lenders and funders to grant the same flexibility to the property sector as it is providing to tenants which need support through this crisis.
- Business rates relief: Review the National Non-Domestic Rates (NNDR) waiver set at £51,000 and below, which is not available to many SMEs (small to medium enterprises) in high value areas, particularly central London. This could be remedied by the application of the Companies Act definition of a ‘small business’ rather than rateable value, or using the definition of a micro business with 10 or fewer employees.
- Rates holiday for unoccupied buildings: The one-year rates holiday is currently only available to occupied property in certain categories of use. This “needs to be extended for a defined period” to unoccupied space, given the prospect of lettings will be reduced until confidence returns.
The London Property Alliance said the changes could make a “considerable difference” in helping to shield a key part of the economy through this “difficult and incredibility turbulent time”.