Recent court decisions that have found in favour of landlords seeking rent arrears should not be seen as the only way forward in terms of repairing retail property revenue flows.

Dan Taylor

Dan Taylor

It is certainly too early for landlords to be celebrating unreservedly. In the instance of the most high-profile decision, which saw Westfield make a claim against The Fragrance Shop, there is a possibility that the High Court decision could be appealed.

It would be worrying if landlords saw the courts as the only remedy, as it would be against their best interests. While the recent case decisions may have many landlords calling their lawyers, it needs to be remembered that making court claims for non-payment of rent is going to be a hazardous and protracted process. On a practical level, the courts are likely to be jammed with cases for many months and even then, there is no certainty of getting a result.

Yes, there will be instances where there has been an irretrievable breakdown between landlord and occupier. But from a wider perspective, landlords need to look at their overall strategy to mend the financial damage caused by the pandemic and the exacerbation of the problems that were already facing the retail sector.

The Royal Court of Justice

Source: Shutterstock/Thinglass

Base and turnover leases can help, but only if you can do the affordability modelling, which gives you a feel for what different types of occupier can turn over in any given unit and location.

Rents should be sustainable for the occupier and in line with what its revenues are – this protects both positions.

In this context, we created an affordability model for restaurants pre-Covid, which we have developed further across various F&B subsectors and leisure uses.

Sharing risks and rewards greatly enhances the occupier-landlord relationship and brings more coherence to asset strategy. Winning in court may be a ‘jam today’ remedy for landlords, but it does not address the longer-term issue of creating sustainable rental income.

Dan Taylor is head of the lease advisory team at Bruce Gillingham Pollard