With clothing and other retailers (non-essential services) being barred from trading during lockdown, rental obligations are under intense debate. Kayla Shadiack, senior associate at Christodoulou & Mavrikis Inc, a FASA service provider member gives an overview and guidelines to navigating the legalities of rentals.
Certain retail groups, including The Foschini Group, Truworths, Mr Price Group, Woolworths and Pepkor have been in negotiations and discussions with the Property Industry Group, and made a counter proposal to pay R220 million as a collective group which would amount to 20% of their normal rental to be paid.
According to a statement issued by the National Clothing Retail Federation of South Africa, retailers are in discussions with the Property Industry Group, representing retail landlords in a bid to find a joint and “mutually beneficial response” to the significant challenges created by Covid-19 pandemic and have proposed that 20% of normal rental be paid during lockdown as a “general guideline” to the industry.
This proposal does not necessarily set a precedent as it is merely a guideline and has led to tenants calling on landlords to enter into negotiations to waive rent payments, decrease monthly rentals, or to defer rental payments. Another proposal from tenants has been to impose strict turnover based rentals without a base minimum.