Landlord and retailer bodies have requested that the UK government set up a ‘furloughed space’ scheme to pay rent and service charges owed by tenants.
The British Property Federation and British Retail Consortium, supported by other UK property lobby groups, have written to the UK Chancellor, Rishi Sunak, making the request.
The proposed ‘Furlough Space Grant Scheme’ (FSGS) would, ‘mirror similar schemes being introduced in Denmark and other countries, whereby the state supports the fixed costs of businesses that have experienced dramatic falls in turnover due to the coronavirus outbreak.’
The letter suggests eligible businesses would submit to the government a forecast of the actual or expected drop in turnover for the period of lockdown and details of the fixed property costs due during the period.
Government would commit to meeting the costs on a sliding scale of 25% of cost paid for a 40%-60% drop in turnover; 50% if the fall in turnover is 60%-80% and 100% where the business is not trading at all.
The UK government has already removed one of the costs of property occupation - business rates - and it has underwritten 80% of ‘business interruption’ loans for businesses to come from banks. But the groups say many businesses will not get loans, with retailers’ position especially ‘grave’, ‘due to lenders’ reluctance to lend to the retail industry.’
The government also introduced furloughing for UK employees who would otherwise have been made redundant, paying 80% of salary, a scheme which began receiving applications this week.
The letter, however, continues: ‘The truth is that with little or no turnover from trading, ongoing payment of property costs will imminently become impossible.’
The letter requests discussion with ministers and officials within days because ‘time is of the essence’. They stress that commercial buildings are part of an inter-connected ‘ecosystem’, linking tenants with landlords and landlords with the banking system and the pensions and investments of the public.