London’s biggest property owners have warned of the risk to financial stability if banks and lenders do not show flexibility towards landlords that don’t receive rent during the pandemic
London’s biggest property owners have warned the chancellor of the risk to financial stability if banks and lenders are not urged to show flexibility towards landlords that don’t receive rent during the pandemic.
London Property Alliance, which represents more than 420 property companies with interests in central London, said in a letter that the “survival prospects” of many property companies and their assets are at risk if lenders failed to exercise forbearance when tenants do not pay rent.
Property companies, many of them owned by pension funds managing the savings of millions of people, are facing sharp falls in income after most retailers withheld rent at the March quarter payday on stores that are closed in the lockdown. That means many landlords could breach debt covenants, which could lead to lenders seizing assets.
Brian Bickell, 65, chief executive of Shaftesbury, which owns Carnaby Street in central London, said that the government needed to avoid a repeat of the 2008 financial crisis, when banks repossessed properties.
He said: Lenders could step in and seize their securities and that would mean businesses wouldn’t know if they can re-open again. Our aim is to come out of this with as many businesses remaining open as possible, but we need to get the flexibility from lenders. We do think this is important for financial stability as a whole.
Landlords nationwide are being asked to agree rent deferrals and rent holidays for occupiers that are unable to trade.
Some of London’s biggest landlords, including Cadogan Estates, which owns large parts of Chelsea and Knightsbridge, have agreed rent holidays for struggling businesses.
Land Securities, which owns shops in west London and the Trinity Leeds shopping centre, has set up an £80 million fund for tenants struggling during the pandemic.
It urged the Treasury to review the £51,000 threshold for business rates relief, which excludes most businesses in central London.
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