The survival of Britain’s high streets will be decided in “weeks rather than years”, warned retailers and landlords, as they pleaded for government help with rent.
In a letter to Rishi Sunak, the chancellor, a coalition of the UK’s biggest retail chains and property owners warned that “many viable companies” will file for administration if the government does not intervene further, causing job losses and a “devastating impact” on high streets.
“We have come together, as voices of both commercial tenants and landlords, to propose that the government introduces a scheme of rental support for the space that has in effect been furloughed, just as staff have been,” said the letter, from the chiefs of the British Retail Consortium and the British Property Federation.
The two organisations represent companies from Next and Marks and Spencer to British Land and Land Securities.
The survival of retailers “is now being measured in weeks rather than years”, it said, and the “majority of businesses are experiencing dramatic falls in turnover of up to 100 per cent” after the government ordered all non-essential stores to be closed to customers.
As the lockdown in the UK continues, retailers believe a three month moratorium against eviction for non-payment of rents proposed by the government will not be enough to help them survive. “With little or no turnover from trading, ongoing payment of property costs will imminently become impossible,” the letter warned.
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Many of the high street’s largest names, such as Top Shop owner Arcadia, have already called in restructuring experts or begun talks with their landlords about renegotiating leases in a shift that could leave hundreds of shops empty across the UK. Others have been forced into administration, including Debenhams, Laura Ashley, Oasis and Cath Kidston.
Further collapses will have a serious impact on landlords, including UK pension funds, listed companies and private investors. These are likely to be the next casualty of the crisis, according to restructuring experts.
Large shopping centre owners such as Intu and Hammerson have reported rents falling by two-thirds as tenants closed their doors.
The two industries want the government to support a “furloughed space grant scheme” where the state would cover the fixed costs of businesses that have experienced dramatic falls in turnover. Similar schemes have been set up in Denmark and other European countries.
The groups have proposed a sliding scale of partial payments to cover property costs, which would still leave some of the burden on the tenant and landlord.
The government has already stepped in to help businesses with a series of measures including grants, business rates holidays and lending schemes that provide government guarantees. A furlough scheme that will cover the wages of millions of employees temporarily laid off comes into effect on Monday.
Retailers said they were largely unable to take advantage of business interruption loans because lenders are reluctant to lend to shops. “Even full use of these loans will only support their businesses for a matter of weeks or months,” the letter added.
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