Happy Whitsunday! Indeed, not a greeting currently covered by your local card shop.
Whitsunday or 28 May is the latest Scottish rent quarter date. Innumerable tenants across the country are due to pay a quarters rent to their landlords on that date. But will they pay?
Landlords will be nervously checking their rent accounts.
Deep in the clutches of the current coronavirus pandemic many tenants remain unable to occupy their premises. Almost all will have suffered some level of economic fallout. The issue of whether to pay rent under their leases has been simmering for months.
In England, where rent quarter dates are different, the issue crystallised quickly. On 25 March tenants under English leases were due to make their first quarterly rent payments of the year. This was just as lockdown took hold.
The UK government acted quickly in defence of tenants by temporarily stopping landlords from terminating leases for non-payment of rent. Landlords and tenants were encouraged to use the resulting breathing space to engage in discussion and find ways to work together during the crisis.
In some cases, deals have been done. Rent holidays have been granted, concessions made and consensus reached. Other landlord /tenant relationships have been more strained.
In Scotland, tenants would have paid rent on the first annual payment date of 28 February. As such most tenants will have been paid up to date going into the crisis.
The Scottish Government has enacted similar legislation to that seen in England to delay termination of leases for failure to meet rental liabilities. The recently published Corporate Insolvency and Governance Bill offers more protection to tenants (from statutory demands and winding up orders).
The 28th of May, however, is the first Scottish rent payment date to occur during lockdown. It is a check-point which will enable us to analyse how the real estate sector is bearing up.
Recent research from the Scottish Property Federation makes for grim reading. Poor rental collections have left half of Scotland’s commercial landlords facing ‘serious or terminal’ problems. This situation is compounded by a lack of government initiatives aimed at supporting landlords.
With cashflow issues and pressing obligations owed to lenders many landlords find themselves in an alarming position.
The concern for occupiers, funders and our communities is that a loss of investment from commercial landlords impacts on us all. Vibrant city centres, variety in accommodation, replenishment and refurbishment of real estate stock, urban regeneration, development and ultimately jobs all hinge on maintaining a healthy investment community.
This year landlords are bracing themselves as 28 May dawns. Good cheer may be in short supply.
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