Health club landlords advised to hold their nerve over non-payment of rent

Ross Kirton, head of leisure agency at Colliers International, says landlords with portfolios containing gyms should hold their nerve in the current climate when it comes to rent payments, or risk long-term damage to relationships with tenants.

His statements comes following today’s news from HCM and ukactive that reveals some operators are facing legal action over unpaid rent.

Humphrey Cobbold, CEO of Pure Gym told HCM the situation is deteriorating and the government needs to act swiftly, saying: "The burden of dealing with the economic impact of the COVID-19 pandemic continues to fall on commercial tenants rather than being shared equitably by landlords."

Cobbold added that the government should amend Section 82 of the new coronavirus Act 2020 immediately, in order to protect operators from crippling claims. As it stands, the act allows landlords to commence winding-up proceedings against tenants.

Kirton believes this approach would be short-sighted, however, saying: "Landlords would be in a far worse position if they got back possession of empty units and had to remarket them – especially in the current climate.

“It's unhelpful that a number of them are taking a heavy-handed approach to collecting March quarter's rent," he continued. "It’s unclear how long the ban on non-essential travel and closures will last, but landlords should be mindful of maintaining longer-term relationships with tenants after COVID-19.

“I believe a more pragmatic approach would be to look at individual cases and see whether there's scope for a re-gear of a lease, such as removing a forthcoming break clause or creating a reversionary lease in exchange for a rent-free period," Kirton told HCM.

“Similarly, where rent invoices remain outstanding, landlords should consider against some of the harsh measures being adopted and instead, seek to agree an opportunity for an open discussion with tenants about outstanding rent following the pandemic. This will hopefully result in better long-term relationships for all parties concerned.”