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Landlords - how to protect your commercial investments during Covid-19

View profile for Neil Marshall
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Commercial landlords beware!

In response to the coronavirus outbreak the government has put a number of measures in place to support businesses that may have been adversely financially impacted.

Boris Johnson ordered all but essential shops to close last Tuesday due to Covid-19 in an attempt to stop the spread of the deadly virus.

If this impacts you as a commercial landlord what steps can you take to protect your investment? Here we outline nine measures that may help:

1. Establish dialogue with your tenant

This should already be strong. If not, there is no time like the present. Impress on them that you are here to help and their success in fighting this virus is also yours.

2. Rental holiday

If you can afford it and want to build goodwill, you could offer a rent holiday of up to three months.The government have put on a three month moratorium on evicting commercial tenants, although the onus still rests on the tenants to pay later down the line – see point nine below regarding tackling arrears. 

To assist your tenants you could signpost them to some of the various government support that is now available.

3. Grants

(i) –If the business premises has a rateable value of £15,000 or less then they should already have been benefiting from small business rates relief. If this is the case these tenants will get a £10k grant. The full details of this support package are still yet to be released fully but it is thought the local councils will deliver these grants and it is not necessary to apply.

(ii)- If the rateable value is between £15,001-£51,000 and the business operates in the retail, hospitality or leisure sector in England, these businesses can receive a grant of up to £25k and will not need to pay any business rates for 2020/21 period.

4. Furlough staff

HMRC will pay employers a grant worth 80% of an employee’s usual wage costs, up to £2,500 a month, plus the associated National Insurance and auto enrolment pension costs. This can be backdated to 1st March 2020. This is to safeguard workers from being made redundant.

5. VAT deferment

The government will defer VAT returns from 20/3/20 to 30/6/2020 for any business during Covid-19. This can be paid anytime in the 2020/21 tax year. HMRC have advised businesses who wish to use this assistance can simply cancel their direct debit.

6. Self-Employment Income Support Scheme (SEISS)

This will reimburse 80% of a self-employed persons average profits over the last three years, with a cap of £2,500 per month. You must have been trading for at least 12 months to qualify. This only covers businesses with a profits of less than £50,000 p.a. The grant will run for an initial three months and be paid in one go. HMRC will inform those eligible and will have the grant paid into their account, this is expected to be by the beginning of June.

7. Additional funding

The Covid Interruption Business Loan Scheme (CIBLS) offers loans supported by the government with the first 12 months interest and fees also covered by the government. The scheme will be delivered by 40 participating banks and lenders. It will be important for those businesses to show that their business plan is viable. If business was strong in 2019 then hopefully it will continue to be post Covid-19. Like any funding no one product fits all and it could be that a more suitable product may be available. Advice should be taken before entering any significant commitment.

8. Signpost/recommend professional assistance

Particularly if they are looking at point seven – they may need assistance with cash flows/projection forecasts via their accountant or a broker to assist accessing the CIBLS or an alternative lending product.

9. Tackling arrears 

These are unprecedented times and will take many months to recover. Show the business you are prepared to take a long term view and sit down to agree a workable, repayment plan to address any arrears.

By being proactive in your approach towards your tenants by signposting them to any or all of the above, you will assist them to recover, which will only help you protect your investment and strengthen the landlord/tenant relationship.

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