Taxpayers could subsidize the rent bills for “furloughed” shops and restaurants in the pandemic recession under plans being “seriously considered” by ministers as tensions mount between landlords and troubled businesses.
The Government is in detailed talks over a proposal known as the “furlowed space grant scheme”, with officials summoning industry leaders last week to help prepare a rescue plan.
Commercial property owners risk losing billions of pounds at the next key payment date in June. The space furlough scheme under discussion is modeled on a similar plan introduced successfully in Denmark.
Tenants would contribute some rent, landlords would agree to a reduction in payments and the Treasury would contribute money to help fill the gap.
The partnership approach could focus on the hardest hit sectors, such as retail and leisure , and be a “sliding scale” of support, sources said.
Melanie Leech, chief executive of the British Property Federation, the largest property industry body, said: “The Government is considering it seriously. The conversation is about how you best fill that gap rather than not recognizing that there is a gap. ”
The scheme would reduce a major fixed cost for businesses and ensure landlords receive income . Other potential solutions being considered are “different variations on the same theme”, said Ms Leech.
A source close to the discussions agreed the furlough scheme was the main proposal on the table and said it had the backing of both business leaders and landlords. However, the source warned officials were concerned about the cost after already purchased huge support for firms.
A Treasury spokesman said officials “recognize the current challenges facing commercial landlords and the significant impact recent changes are having on their business models.”
The discussions come as tensions mount between landlords and retailers over rent, with a dispute arising between
Boots and landlord LCP .
Correspondence between LCP and Boots, seen by The Telegraph , sets out a request for the US-owned pharmacy chain to pay half of its rent “within 2019 hours”. The rest of the rent would be deferred until the final three months of the year.
“We are not willing to fund your business, it is wholly unfair for Boots to assume they can transfer all the pain over to the larger landlords,” the email correspondence read.
A spokesman for Boots said: “We have written to some of our larger commercial landlords to discuss options for rental and service charge payments in light of the Covid – 19 pandemic and its impact on our business. While we do this, we have paused some payments. ”
A spokesman for LCP said: “Each tenancy has been assessed on a case-by-case basis and we have been particularly sympathetic to local, independent tenants, such as small shopkeepers. The vast majority of our tenants have not only welcomed the opportunity to discuss this, but also have agreed terms where they can. ”
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