Lording over tenants

REPORTS OF negotiations between owners and tenants of popular shopping malls show what’s possible if people come together in a co-operative spirit. At the same time, they illustrate the limits of Prime Minister Dr Keith Rowley’s appeal to landlords to have a heart and point to the need for examination of creative ways in which tenants could be supported by the State.

In one report, mall owners have waived their right to a month’s rent. At the same time, they are asking tenants to pay maintenance fees in order to service security, janitorial and maintenance needs. But, understandably, tenants are not satisfied. They’ve asked for rent forgiveness stretching from March to May; have rejected maintenance fees and proposed a six-month stimulus plan in which they pay one-third of the rent, the landlord absorbs one third, and the State shoulders the rest.

Given the competing interests of both groups, such a divergence of views is to be expected. When it comes to residential tenants, it is clearer to understand calls for compassion, particularly for households for which income streams have abruptly dried up. But the picture is somewhat murkier for commercial properties. There’s room for exploring different classes of relief for these different categories.

When it comes to commercial properties, it is worth noting that many tenants run small businesses. These businesses are important in the long run because they provide employment. It’s not in the interest of mall owners to evict longstanding tenants with whom they have developed good relationships. To do so would be a case of cutting off the nose to spite the face. Landowners need to bank on their tenants ultimately.

But because many tenants are shuttered it is unrealistic to expect them to service debts. It is also unrealistic to expect them to have vast reserves of cash floating around. Even landowners have problems too. They still have to pay property tax, insurance, maintenance, and mortgage payments. So there is a real, almost intractable conflict that requires the State to play a decisive role, mindful of the overall need to safeguard the economy.

The State would do well to consider measures introduced globally. When it comes to residential renters, in New Jersey and New York, all evictions are suspended until late June. In the UK, laws have been brought to offer commercial tenants protection. States in Australia reduced land tax for commercial property and introduced a code of conduct for landlords and tenants under a state-run mediation process. It is time to consider same. Giving property owners support in exchange for concessions on the small man is worth exploring.