A new wave of lockdown – what does it mean for High Street retailers?


3 November 2020

By Sanjay Makwana

In a pre-Covid world a retail tenant’s primary concern was the effect that online shopping would have on the foot fall within the high street. However, post-Covid retail tenants may be facing new concerns not only with regard to the payment of rent but also the financial strength of their landlords.

One of the largest shopping centre landlords, Intu (who own Lakeside along with 14 other shopping centres) is facing financial difficulty and there have been talks that suggest they may have to close their shopping centres.

The biggest worry for tenants of Intu-owned shopping centres or other retailer landlords is that if the landlords are unable to open their doors, the tenants will not be able to operate. Throughout the first wave of lockdown, the primary focus was on tenants and how they will be able to afford to pay their rent during the closure, but now there is a shift of concern towards the sustainability of the landlord.

Therefore, tenants should be scrutinising the small print in their lease to check where they stand if the worst happens. Whilst it is unlikely the lease will detail the exact scenario which the tenant may end up facing, it is the starting point.

The lease will outline the landlord’s obligations together with the obligations of the tenant. It is essential to obtain advice early to be clear what obligations the landlord may be breaching if the landlord is facing hardship.

As seen in the situation of the Intu shopping centres, administrators have  been instructed to deal with the day-to-day running of the sites. Nevertheless tenants may still be adversely affected if decisions are made regarding key services such as the cleaning or security which could have a negative impact on the tenant.

Within the lease it may state how those services are to be managed and a tenant may be able to argue a reduction in what they pay if the services are not in line with those outlined in the lease. This is particularly the case where the premises end up being less fit for the tenant’s purpose.

The Government introduced legislation to protect commercial tenants, which prevented landlords and lenders from taking action for non-payment of rent up until the end of September. Although this relived the stresses of the tenants at the time, it is now that we are starting to see what effect non-payment of rent has had on retail landlords.

At Gepp Solicitors we can advise on all aspects of commercial property law. For more information and guidance, please contact us on 01245 493939.

This is not legal advice; it is intended to provide information of general interest about current legal issues.