Agenda item
Commercial Tenancy Arrears Review
Purpose
To consider the commercial tenancy arrears position in light of the statutory limitation on recovery action against tenants.
Recommendations
a) That Cabinet notes the arrears position on the commercial portfolio; and
b) That Cabinet grants delegated authority to the Cabinet Member for Finance to utilise the tools set out in section 3 on a case by case basis to protect the commercial interests of the Council.
Minutes:
Members received a report which asked Cabinet to consider the commercial tenancy arrears position in light of the statutory limitation on recovery action against tenants.
In response to the Covid-19 crisis, in March 2020, the Council issued Business Support Terms to its commercial tenants. The Terms, attached at Annex A to the report, allowed all commercial tenants (except those able to continue to trade, headlessees and Government organisations) a three month rent deferral. In August 2020 the Council decided to extend the rent deferral for a further three months for only those tenants still unable to trade. The decision included the offer to tenants to enter into a monthly payment plan for the deferred rent, with the aim being to bring their rent accounts up to date by the end of March 2022, or the end of lease, whichever occurred first.
The CIPFA Asset Management Team had monitored English and Welsh authority responses to the Covid-19 pandemic in respect of their commercial tenants and the team’s advice was listed at 1.3 of the report.
Annex B to the report detailed the Criteria for Further Commercial Tenant Support and was intended to provide a policy for both the November 2020 trading restrictions and the further trading restrictions implemented by the Government at the end of December 2020, as a result of the response to Covid-19. The Financial Implications section of the report explained the average performance of the Council’s property portfolio and outlined the processes for rent deferrals, ‘Lease Re-gear’ and rent free periods.
An alternative options was that the Council could choose not to provide further support however, the risk was that this could increase the potential for reduced future income if the rent payments could not be met.
Councillor Coul introduced the report and explained that this report was proposing a policy to clarify how the Council would process any requests received. This was seconded by Councillor Mead.
Councillor Graham commented on the level of support already provided to local businesses and thanked the staff involved. He asked for clarification as to how and when the policy would be reviewed and queried if officers would be reporting back.
The Chief Finance Officer and Deputy Chief Executive, Mrs Griffiths, advised that these figures would be included in any variances detailed in the Budget report and would also be report to FMOS in the annual commercial property report. She added that each case would be reviewed on a commercial basis.
Councillor Coul did not feel it was appropriate to put a time limit on the process because the business sector could continue to be impacted by Covid for sometime to come. She assured Councillor Graham that the policy would be reviewed if officers felt it was not working adequately in the future.
Having read the report, and having heard from the Members present, Cabinet
Resolved that
a) the arrears position on the commercial portfolio is noted; and
b) authority is delegated to the Cabinet Member for Finance to utilise the tools set out in section 3 of the report, on a case by case basis, to protect the commercial interests of the Council.
Supporting documents:
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