GOTA negotiated back in September 2019 the terms of the Tenants Charter, while we got a lot of our requests agreed, there were lots unfortunately denied therefore while the Tenants Charter is a very useful tool, in our current economic crisis, unfortunately falls short of what we need to ensure business viability. It does however include a very valuable affordability review commitment. In simple terms this is how it works:
Affordability Review
1. AFTER a rent valuation based on market evidence has been reached by both parties, the tenant can engage the affordability review.
2. The tenant informs the landlord that the market rent is unaffordable for their business.
3. The landlord will ask the tenant to evidence why their business cannot afford to pay – this would take into account factors such as business model having capped revenue and expansion capabilities to keep up with the market. Evidence should include narrative as to the business history, social and community value, financial information on last 3 years turnover.
4. Arch Co review the submitted information at Board Panel and will propose a discount the ‘market valuation’ to support the tenant to remain in occupation.
5. Often this exceptional valuation is provided by the landlord to the tenant as part of a side letter to their lease. This means that the lease will state the market valuation eg. £50,0000 and the side letter will state the rent being paid is £22,0000. See special note on side letters.
Viability Review
This is a very different discussion point, this is not a claim of poverty, but rather a claim that your business is not profitable enough to remain a good investment for you based on the evidenced market value of the rent.
The Arch Co process for all rent concessions is for the surveyor or asset manager to ‘represent’ the tenant to the Arch Co Board for decision at panel.
This discussion is more complex and commercial discussion which our members have tried in vain to conduct with the landlord surveyors who on the most part do not have the business acumen, experience or expertise to fully understand. We therefore recommend that you escalate any concerns regarding this process to the Arch Co senior management for support Sion.Latter@telerealtrillium.com and copy in Contact@guardainsofthearches.org.uk so we can support you through this process.