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Managing and RE-NEGOTIATING YOUR property costs
22 May 2020
Many businesses today, across all sectors have been struggling to make their quarterly or monthly rent, business rates, and service charge payments over the past months, some by choice to defend cash and others simply because there’s not enough cash to make the payments, as revenue has all but dried up as a result of this crisis.
how has this affected you?
Landlords and Tenants across the nation remain in open dialogue to work out short and longer term solutions, often in the spirit of compromise and support, but in many cases the position has been more adversarial on both sides of the Landlord and Tenant fence.
Business Rates have also proved divisive. The Government were quick to support the Retail, Leisure & Hospitality sectors by providing a 12-month business rates holiday, and access to grant funding based on property Rateable Values and defined use classes. There is also help for small businesses, but business rates for larger premises, mainstream offices or industrial sectors remain fully liable for their rates bill.
Planning for tomorrow – lots of options available
Plans need to be drawn up to deal initially with the phased return to the workplace for businesses. Existing premises will need to be redesigned to meet regulations and negotiations will need to be held to deal with any rent and business rates arrears and other associated outstanding property costs.
Lease commitments will need to be reviewed and a strategic approach will be required to transition from the old to the ‘new’ way of working, ensuring the business premises are fit for purpose on the other side.
Your property costs owed won’t disappear so it’s key for you to agree a sensible compromise on deferred or unpaid rents to secure a solution that’s fair for both sides and offers you a realistic opportunity of returning to pre COVID trade levels to a point where any deferred rents can be repaid.
As well as rent deferrals and holidays, there are a myriad of other options. you should consider where rent owed can perhaps be offset by extending lease terms, moving break option dates or re-gearing rent review provisions.
With regard business rates, it’s important that you understand if you’re eligible for support or grants and are receiving those benefits. There are several grey areas in the legislation and certain reliefs that are only applied by local authorities if a business has specifically requested them. We’ve helped a number of clients secure benefits they were not sure they were eligible for.
We’ve just passed the June Quarter day, signalling a further payment due date for most businesses, coming off the back of a full quarter of “lockdown” measures, now is a crucial time to consider your position whether you are a Landlord or Tenant.
What should you do now to manage your property costs?
So, what should you do now? We’d strongly recommend getting advice and starting negotiations now to manage any outstanding or future property costs to make sure a sensible and fair deal can be struck.
The Fortus team can work with you to lead negotiations on dealing with property costs that are in arrears as a result of this crisis and seek to negotiate changes to ensure that businesses can meet their commitments on the other side. We can support in preparing a strategic approach to managing your existing premises or moving to new premises that better suit your business in the future.
By working together with you, we can deal with not only your physical premises and property cost commitments but also consider the use of technology and people management to transition as seamlessly as possible to the other side. In most cases this transition will not be linear and there will be many scenarios to consider and work through.
Ask yourself these questions:
- Have you secured all the benefits your business may be eligible for?
- Do you have any rent, rates or other property payments that you have not made or are owed since the outbreak of COVID-19?
- Are you in touch with or have opened negotiations with your Landlord / Tenant to agree a plan for dealing with property costs over the next 12 months?
- If you are concerned about paying your rent over the next 12 months, have you considered the options available?
- Have you made any plans to alter your premises in the short term to deal with a phased return to work?
- Have you thought longer term about how to change your physical space and premises to better suit your business on the other side?
- Do you need to invest in technology to support changes you would like to make to your business on the other side.