Landlord and tenant relations have enjoyed sustained progress over the past decade, as landlords recognise that tenants need to be treated as customers, not commodities.

Barry Gross BCLP

Barry Gross, commercial real estate partner, Bryan Cave Leighton Paisner

Indeed, numerous landlords with retail tenants have spotted the need to evolve or face extinction and have been doing their bit to create attractive environments and spaces to give tenants as much help as possible in driving footfall to stores.

This and other strides in landlord-tenant relations are threatened by the powder-keg that is the current CVA crisis. We risk destroying all that goodwill with a return to the polarised approach.

As Liz Hamson’s leader column ‘There’s nothing voluntary about CVAs for landlords’ suggested: “now is the time for organisations like the BPF and Revo to come together and find a resolution”. This is something Bryan Cave Leighton Paisner will be facilitating in the coming weeks. We will begin working with senior stakeholders across the sector as part of a consultation to air concerns and consider alternatives to the existing CVA framework.

We will invite landlords, insolvency practitioners, tenants and industry bodies to discuss the issue, which  affects the retail sector but has wider repercussions across real estate, finance and investment. We hope to make recommendations and identify a pathway that will ensure the long-term survival of viable businesses without landlords being unfairly penalised. We look forward to sharing our findings in due course.

Next superstore

The likes of Next have been “unapologetic in their suggestion that they will seek lease terms guaranteeing rent reductions”

Source: GDFL/Creative Commons

It has become clear in the past week, as Liz Hamson touched upon in her leader, that healthy retailers are seeing CVAs as giving an unfair competitive advantage to other retailers, while they soldier on despite the challenges. Indeed a number of high-street retailers, including Next, are unapologetic in their suggestion that they will seek lease terms guaranteeing commensurate rent reductions if a neighbouring retailer implements a rent reduction through a CVA. The potential knock-on effects in the market should not be underestimated.

This is something we hope our facilitated discussion will avoid. While not magically making the challenges disappear, we want all parties involved in our consultation to feel the resolutions are balanced and fair, bringing an end to the phoney war being waged in the media between landlords and tenants and defusing an explosive situation.