By Matthew Owen

It may seem a lot longer than 10 weeks since you last went to your favourite pub, café and restaurant, but it could be months before you will be able to, or more importantly want to, frequent them again. Social distancing and staff kitted out in some form of PPE will not exactly enhance the social experience and joy of drinks and meals out.

The whole leisure industry is suffering terribly from the Lockdown and is likely to be more adversely affected than most as it is generally a discretionary customer spend and will be last out of Lockdown. Most sympathy must be reserved for the local independent operators.

Thankfully though, we  are starting to see tenative steps towards normality resuming.  This week sees some fast food operators and coffee chains re-opening for drive through customers. There seems to be, understandably, pent up demand, with long queues reported at many well know fried chicken outlets.

The Government is trying to assist the sector by introducing temporary permitted development rights pursuant to the Town and Country Planning (General Permitted Development) (England) (Amendment) Order 2015.

“These rights permit restaurants, cafés and bars/pubs to operate a food takeaway service, without requiring a change to their planning permission. This will run to 23 March 2021, and as with many Coronavirus measures may well be extended.”

The “provision of takeaway food” includes any use within Class A5 and any use for the provision of hot or cold food prepared for collection or delivery to be consumed, reheated, or cooked by consumers off the premises.

There are some simple conditions that need to be observed, including the operator must inform the local authority of which premises are being used or will be used for the provision of takeaway food at any time until the deadline. The use class will revert back to its previous lawful use after 23 March 2021 or, if earlier, when the provision of takeaway food ends.

Important Legal Points to Bear in Mind

For tenants this might be a lifeline, in being able to adapt their businesses and keep custom, showing their customers that they are “open for business”. For many it might not be financially profitable but it might just be the life support the business needs to see it through. However from a legal point of view they should:-

  • Check their leases in relation to user clause. Often takeaway will not be a permitted use and consent from the landlord should be obtained
  • Try and persuade your Landlord to issue the consent in letter form rather than the delay and cost of a formal lease variation
  • Make sure to notify the local planners in writing

We would hope that landlords issue consents as required, albeit in mixed use buildings (ie with apartments above), there may be constraints on them issuing consents, or may be reasons of good estate management as to why they would not want to consent. Of course it is far better for landlords to have a functioning tenant.

Matthew Owen is a solicitor in our Commercial Property team. You can contact Matthew here.

By Daniel Berger

“BBS Law’s service to help landlords struggling with their rent recovery so that they obtain the best possible support from their lenders”

The day before the March 2020 quarter day I wrote an article about how to try and deal with mass non-payment of rent. Since then Landlords have many stories to dine out on (if you could go to a Restaurant) about which tenants have asked for the more outrageous rent concessions.

Clearly all parts of the economy have suffered under the handbrake that has been yanked on by global lockdown, and there are many tenants that deserve sympathy, others less so. We are now mid-way through the quarter and Landlords are looking to the June quarter day with trepidation.

“It is likely that even fewer tenants will pay rent on the June quarter day as the Government has given more green lights to them to stop paying rent.”

The extended measures to protect tenants beyond the three month moratorium brought in during late March include:

  • Before any winding-up petition is made based on claims that the tenant is unable to pay its debts, must first be reviewed by the Court to determine why. The law will not permit petitions to be presented, or winding-up orders made, where the tenant’s inability to pay is the result of COVID-19. Which landlord fancies spending time and money getting to the Court to explain that one !
  • Legislation will also be brought forward to prevent landlords using commercial rent arrears recovery (CRAR) unless 90 days or more of unpaid rent is owed
  • The new legislation to protect tenants will be in force until 30 June, and can be extended in line with the moratorium on commercial lease forfeiture. In all likelihood it will be extended

A link to the full Government release is here: https://www.gov.uk/government/news/new-measures-to-protect-uk-high-street-from-aggressive-rent-collection-and-closure

So here you are 7 weeks into lockdown and looking at a significant arrears schedule that is likely to get substantially worse come the end of June. Most commercial landlords will have some loans secured on the now non-income producing property, and whether capital and interest, interest-only, quarterly or monthly it is now impossible to avoid a repayment date passing without having had the rent hit the bank account. Prudent landlords may have left sufficient funds in the rent receivable to service the loans for a few months. It would be rare to find such accounts bulging though.

So you look around and see the Government policy seemingly stacked against landlords and other policies and generous financial help for tenants in terms of furlough for non-working staff, rates relief, business grants and loans on generous terms. Where can the landlord seek help. So far, we can’t find any. Landlords are being encouraged to “talk to your tenants”, “be reasonable”; Communities Secretary, Robert Jenrick, says: “We understand that landlords are facing their own very serious pressures and are concerned about their position with lenders. We are working with banks and investors to seek ways to address these issues and guide the whole sector through the pandemic.”

It seems the only help the landlords are getting is at the discretion of the lenders. When speaking to many commercial property clients we are seeing very mixed responses. Interest holidays are simply not available. Capital repayments can be suspended for 3 or even 6 months if you are with certain banks and you fit their “criteria”. We are seeing some banks giving no leeway at all, and that old phrase of “selling umbrellas when the sun is shining” seems apt.

The retail banking industry providing residential mortgages has given 2 million mortgage holidays providing some temporary relief to squeezed and worried householders. We are not seeing this on the commercial side at all.

BBS Law Ltd can help you in reviewing your banking documentation and assisting you with documenting any arrangements you come to with your lenders. We also feel we are well placed to assist you in direct negotiations with banks, helping you present your position in the most favourable of manners and being able to advise what concessions more helpful and flexible lenders are providing.

Our  commercial property, commercial and secured lending teams at BBS Law Ltd for advice on your situation and how we can help you at this most challenging of times.

Please contact Daniel Berger, Dov Black or Avi Barr if you would like further assistance.