Kensington and Chelsea council vows “not to aggressively pursue rents” from businesses in coronavirus pandemic

By Julia Gregory, Local Democracy Reporter

A west London council which normally gets £16.7m from its commercial tenants has told them it will look at their struggles to pay because of the pandemic on a case-by-case basis.

In the first quarter of this financial year alone Kensington and Chelsea council  got just £1.1m of the £4.1m rent it was expecting from its 222 commercial tenants.

It has decided to agree payment plans to collect arrears no later than December 2021 – but will assess businesses individually. And it will waive the interest allowed in the lease.

Deputy leader Kim Taylor-Smith said: “We cannot aggressively pursue rents, it is better to support tenants rather than lose them.”

He added: “The council has to show moral leadership on this.”

The council started a “tiered approach”, collecting rent from  businesses which were not affected by the shutdown such as income from mobile phone masts, those which stayed open such as general stores, and those which adjusted such as restaurants which offered takeaways.

Both its housing revenue account and general fund depend on commercial rent for some of their income.

A shortfall could impact plans for those services.

The housing revenue account normally gets £3.2m in commercial rents a year from 130 tenants – with £1.7m from 47 shops, many of them sole traders, across the borough.

The council said: “In essence, these are classic local shop businesses reliant on the local community for trade. “

According to a council report: “Both portfolios are heavily weighted towards the retail/high street sector, and neither are balanced portfolios. They are therefore exposed to greater risks in relation to Covid-19 than other, more balanced portfolios.”

And a £13.5m annual income from 192 tenants of buildings helps fund front line council services and the council’s capital programme.

The portfolio includes 59 high street shops –  many of them local businesses – which pay £3.1m in rent a year between them.

It also has “key tenants with a significant value” in the private education and serviced offices sectors.

The council said the pandemic’s impact so far has varied.

“For some this has been short term, but for others this has been a prolonged period and so many are struggling to now pay the rent due for the remainder of the year, and the rent owed for the first two quarters of the year. “

The council put its March bills on hold because of the uncertainty of lockdown and is only just sending out its June bills.

Pictured top: Kensington High Street