Caroline
Plumb OBE, serial entrepreneur and founder of cashflow management app Fluidly,
examines why the small business backlash against landlords is understandable.
Landlords of commercial space face a backlash, the like of which has never been seen before. There are landlords still demanding 100% rent payments from businesses like yours, despite many of you being unable to occupy your rented space.
Publicans have been hitting the press too. Furious at landlords for asking for rent even with the lockdown calling time on their ability to trade. The hashtag
#NoPubNoRent has been trending on Twitter showing that there is an overriding belief landlords need to help their tenants through this tough time, not kick them while they’re down.
Companies in hot water
WeWork is among many of the larger companies facing public scrutiny as it continues to charge
tenants despite them not being able to use their rented space. Again, perhaps this is you, and I know first-hand it’s not easy to sleep at night when cashflow worries start to consume you.
Yet WeWork – which does not own its buildings – had itself not paid all of its
rent for April and May, although it said it planned to, and has requested a decrease of at least 30% from its landlords.
The shared workspace company, which has had a tumultuous year following its high-profile failed IPO has been struggling to keep its
customers happy. Many of its occupants are said to have tried to break leases or have been refusing to pay rent.
WeWork has since started offering rent holidays and other incentives in a bid to hold as many of its members as possible, a sign that it has started to see the bigger picture. However some companies have
simply removed their credit card details and are unlikely to return once this pandemic is over.
It is not the only high profile company finding itself in the glare of negative spotlight. IWG, which owns the Regus brand, is facing a backlash from customers who say that the workspace provider’s response to the crisis shows a lack of care and is an attempt to “profit off companies that cannot earn money during the crisis”.
Government intervention
Some emergency laws were rushed through parliament late last month to stop retailers and other businesses from being kicked out before June 30th.
Melanie Leech, chief executive of the British Property Federation, said: “Businesses who cannot pay their rent because of the coronavirus outbreak will be safe from eviction under new government plans.”
The British Property Federation is hopeful that these measures will provide assurance to tenants that they will not face eviction in the next three months. However, with Boris Johnson’s address on Sunday 9th May, it is unlikely many tenants will be able to use their space from 30th June. The government needs to have a clear roadmap for the roll-out of its easing of restrictions to help businesses like yours and mine.
What small business can do
It’s understandable scepticism is rife where there is talk of eviction. Instead it is perhaps more likely many landlords are equally frightened, due to the high possibility of being unable to reoccupy space even when ‘normality’ returns.
The stand-off is of course difficult for both landlords and tenants. However, landlords refusing to negotiate rent holidays and transparent agreements must be held accountable. Many small businesses will not be able to survive if they have to continue paying their rent in this crisis.
At Fluidly, we are hearing this across the board from companies like yours and in our own case acted fast on our rental agreement when it became clear lockdown was inevitable. After people, rent is the biggest cost for many of you, particularly service-based businesses.
So even with the government’s attempts to protect against evictions and the announcement of a business rates holiday for companies in the retail, hospitality and leisure, I’ve no doubt many of you will need further price reductions or rent-free periods.
Beyond tricky negotiations with landlords, I’d also recommend exploring other areas to bring costs down such as gas and electricity. Some providers have come out and said they are willing to negotiate potential bill deferrals. For those unsure of their provider, raise this with your landlord.
To prepare for asking your landlord about rent reduction or payment holidays make sure you have all your ducks in a row, know your rights, make a record of the conversations you’ve had and have a clear idea of what you want to discuss.
There seems little doubt as the pandemic continues there will be a raft of legal battles to be fought between landlords and tenants, the outcome of which remains unpredictable.
Let’s hope common sense prevails, so we can all get a good night’s sleep soon.
