Landlords taking ‘fair’ approach to rent deferrals

PROPERTY landlords are adopting a flexible, realistic and fair approach to tenants when it comes to rent reductions and deferrals, according to the Society of Chartered Surveyors (SCS).

The SCS, in a submission to the Department of Justice, said its members have reported that landlords “are agreeing confidential concessions – notwithstanding the terms of the lease – to help tenants get through the current economic difficulties.”

“Our members are at the coalface and are very aware of the pressures the current recession has brought to bear on both sides. Our members are telling us that landlords are carefully weighing up the commercial reality of losing a tenant against the legal and financial obligations of that tenant and acting accordingly,” said SCS president, Sean McCormack.

The body was recently invited by the Minister for Justice Dermot Ahern to address how the society and its members might “contribute towards ensuring that we continue to have a dynamic and vibrant retail sector which supports employment within the economy and which, at the same time, provides an appropriate return for investors.”

The submission noted that while some retailers have been hit hard by the economic downturn, it points out that landlords must also deal with a set of challenges including the historically low purchase price of property, funding terms and fluctuating valuations.

Mr McCormack said commercial leases and rent reviews are complex agreements and subject to the ebb and flow of supply and demand.

“We have a highly efficient system in place for dealing with rent disputes but, given the legal context of a commercial lease, any interference in existing contracts could give rise to legal difficulties.

“For that reason we believe any interference would need to be delicately nuanced.”