Businesses call for further protection as landlords demand rent

Landlords have been accused of taking public subsidy for their own businesses while continuing to charge their tenants full rent

Men fighting over door
The temporary ban on commercial evictions is due to end soon and many businesses fear they are on the verge of going bust

Cash-strapped business owners have warned they are at risk because landlords are refusing to compromise on rent, triggering calls for further protection amid fears of a brutal autumn.

Mike Cherry, chairman of the Federation of Small Businesses, has called on the Government to examine ways to protect small companies on the brink of collapse “because their rent is too high and landlords won’t compromise”.

“A lot of small firms have long leases, some with personal guarantees, and it is wrong for otherwise-viable small businesses to go under just because they’re tied into paying high rents that their landlords would not be able to charge new tenants in the current climate,” he said.

Mr Cherry’s call to action comes as Robert Jenrick, the Housing Secretary, is warned that a rising number of small-business owners fear they are on the verge of going bust due to the behaviour of their landlords. A temporary ban on commercial evictions protecting tenants is due to lift at the end of next month.

In a letter seen by The Sunday Telegraph, Labour MP Stella Creasy has told Mr Jenrick that she has received complaints about landlords taking public subsidy for their own businesses while continuing to charge their tenants full rent, as others “point-blank refuse to meet with or engage with tenants about potential rent repayments”.

Vendors at the New Covent Garden flower market are among those to publicly complain about a lack of support from their landlords in recent weeks, despite a voluntary code of practice in mid-June stating that landlords should help needy tenants where possible.

However, commercial landlords, many of whom are major pension funds, are expected to lose about £3bn by autumn and there have been accusations from landlords that a minority of healthy tenants are using recent protections as cover to hoard cash instead of pay their rent.

Melanie Leech, chief executive of the British Property Federation, said that the future of thousands of small landlords who rely on property as their only or main source of income “risks being undermined by large, well-capitalised tenants who are refusing to meet their rental obligations”.

The complaints have emerged amid fears of a grim autumn after the City watchdog last week announced an end to mortgage holidays at the same time as the taxpayer-funded furlough scheme is axed, meaning Nov 1 could be the day when the true extent of the economic havoc wreaked by Covid-19 is revealed.

The mortgage and furlough lifelines have helped millions of people during the crisis. About two million borrowers have taken a mortgage holiday, and as many as 9.4m workers were put on furlough.