EXTENSION OF FORFEITURE MORATORIUM: LANDLORDS AND TENANTS CAN COME OUT OF THIS PANDEMIC STRONGER IN PARTNERSHIP

It was reassuring to hear last week that the moratorium to protect commercial tenants from eviction has been extended until at least the end of the year. Commercial businesses still aren’t operating at full capacity yet and furthermore, not all landlords have engaged in any dialogue at all with their tenants, let alone having a collaborative and constructive dialogue- this news gives business owners some further breathing space and time to come to an arrangement. 

This decision has been welcomed by the Anytime Fitness franchise and I’m sure across the other operators and wider sectors. However, we know these extensions won’t go on forever and in my opinion, we need to strive to find a healthy middle ground between landlords and tenants. 

Let me first caveat by saying that we see it from both sides. Commercial tenants have been left with no income for four months, with the pandemic wiping out large portions, if not all cash reserves within their businesses. This has made full rent payments extremely challenging to meet, while also trying to secure the long-term viability to trade. In the same breath, landlords certainly haven’t come out of this unscathed and the worst could be yet to come. With more flexible working being embraced, businesses will be downsizing their holdings and in the worst-case scenario for some businesses, with CVA’s and others not surviving this unprecedented time and falling into the hands of administrators. 

For ourselves, it’s been very encouraging to see our clubs reopen safely utilising the Covid-safe framework and throughout the enforced closures we have been encouraging and supporting our franchisees in establishing a healthy two-way dialogue with their landlords on the best way to emerge from the pandemic.  

For me, the nitty gritty comes down to two options; short-term cash collection versus long-term tenure, security and partnership. For both parties, surely the latter is the overwhelming preference?  

Of course there’s the option to take full rent and threaten forfeiting a lease but instead, let’s work together and find a way to co-exist and meet both parties’ obligations. We know that some landlords were preparing to issue proceedings in readiness for 1st October and will keep these on ice until something changes; either the moratorium falls away or there are clearer, more robust rules being enforced rather than suggested in the code of conduct issued ahead of the July extension. While issuing these proceedings would provide the landlord with a short-term cash injection; what then? Prospective new commercial tenants certainly aren’t going to be queuing round the block and these landlords could find themselves in an even more perilous position in months to come. 

Its now vital that more is done to enforce elements of the code of conduct issued in July rather than suggest that tenants and landlords adopt it- its really the only way to get those landlords who resist or refuse to discuss a share in the pain all businesses are facing 'around the table'.

In the case of the leisure and fitness industry, health clubs are here to play an important role in our lives long-term. Public Health England’s Better Health campaign shows that the country has had a huge wake-up call and that people’s attitudes to physical activity are changing. There’s been a huge pent-up demand for health club memberships during lockdown and our clubs have hit the ground running with a flurry of new memberships since reopening.  

The potential of a second national form of lockdown is a sobering story at the top of the news agenda right now and its worrying to see this second spike of confirmed cases. However, the data shows that gyms and leisure centres are proving that they can keep members safe, while improving their health. Gyms and leisure facilities in England have had more than 22 million visits since reopening on 25 July and ukactive’s data shows that there has been just 78 confirmed cases of COVID-19 among its customers. Furthermore, none of these cases showed any specific transmission within gyms and have arisen where authorities have contacted facilities regarding a user with a positive result had attended a gym within a certain time period. We hope these figures are being noted by the Government. 

Of course, future restrictions may well be enforced across multiple sectors but for these businesses to stand a fighting chance of surviving long-term and continuing to serve their communities, landlords need to be patient and strengthen their relationships with their tenants; they both need each other. 

Health clubs need to get over the hurdles of rebuilding their membership bases, repaying any additional government lending (eg. Coronavirus Business Interruption Loans and Bounce Back Loans) and restoring their cash reserves before the future is bright again. While the pandemic has certainly accelerated the rise of virtual fitness, the initial usage statistics have shown there’s no substitute for the real thing and that the general public were itching to get back into gyms and have done so responsibly.  

The demand for health and fitness facilities isn’t going away and we encourage landlords and tenants to work closely together to come up with mutually agreeable terms to continue their relationships. While landlords may feel an initial pinch, the bigger picture is that health clubs, gyms and studios will thrive once again. These landlords will continue to have successful tenants occupy their properties and in doing so, have saved people’s jobs and livelihoods. It’s a win-win isn’t it?