Global menu

Our global pages


Optimism and Unity

  • United Kingdom
  • Real estate


COVID-19 poses a threat of unparalleled potency to our real estate markets and economy. So our industry and government must unite behind a grand, generous and visionary response to match the scale of this once in a century challenge.

Pessimism never built anything. The property market is powered by optimism. Property optimists don’t just believe in a better future, they aspire to build it. Their confidence creates bespoke spaces for customers, regenerates cities, wins returns for pensioners and investors, and enhances peoples’ lives. These optimists are you and me: lenders, developers, investors, occupiers and advisers. All of us, working together, have helped make the UK’s real estate industry one of the best in the world.

And the real estate industry always rises again. It built London anew after the plague and Great Fire, restored our cities after the Blitz and survived to thrive after the depression of 1929 and the recession of 2009. I am writing this column in that ebullient tradition of property optimism. Now, more than ever, we need its inspiration.

But even an optimist shouldn’t be a naive Pollyanna, because that would carry no conviction. The truth is as blunt as a brick on a stick - our industry confronts its greatest ever challenge. In the whole of recorded history, no one has ever deliberately stopped the UK economy and then tried to start it again. The only crises comparable to COVID-19 are global wars, but wartime economies boom because countries strain every human and material sinew for victory. Even during the lethal Spanish ‘flu of 1918, the British economy continued to work at full capacity. With a few exceptions (such as Manchester), the British authorities decided winning World War One was more important than fighting the ‘flu with a lockdown.

COVID-19 poses a threat of unparalleled potency to our real estate markets and economy. So our industry and government must unite behind a grand, generous and visionary response to match the scale of this once in a century challenge. If we can think and act together as one industry in completely new and positive ways, we will defeat this virus and thrive long after it has been tamed. If we don’t think big, we will fail small.

First, we need to stop thinking like landlords and tenants – and start thinking like inseparable partners. There have been some heartening signs of this all across the market: rents deferred and forgiven, covenants waived, remedies patiently reserved and sensible compromises reached. Like all of us, I have been proud to be part of an industry that has responded so positively. Most of us realised that we are one interdependent community, from the biggest lender to the smallest occupier – a real estate village. A few tenants and landlords have acted out of blind short-term interest, and not paid rent even though they could, or enforced before they should. But they are the minority, and they (and all of us) need to think again and to think bigger.

If even a minority go down the sue and be sued route and treat COVID-frozen economy as though it were a normal downturn (like the ’89 crash or the dot-com bust), we will turn this from a temporary crisis into a permanent and mass destroyer of our industry’s value and solidarity. We need to learn from other countries, listen to our better natures, and move beyond any sense of an individualistic, rights-based battlefield where landlords and tenants duke it out to dominate the downturn. As an industry, we are caught in the version of the prisoner’s dilemma. If we each pursue our immediate self-interests regarding rent, interest payments and distress, we will all fail. If we work closely together, we can all win.

Other countries have shown us the way through. German landlords and tenants have agreed a code of conduct to ensure the “balanced sharing of burdens”. Parties are encouraged to reach their compromise solutions on an “open book basis”, including the disclosure of any government support. This should help stop rogue and highly solvent tenants using COVID-19 as a pretext for not paying rent, and rogue landlords being less generous than they could easily afford to be.


In the UK, we need to try something even more ambitious. All of our major market players, lobbying organisations and government need to work together to produce holistic solutions that can be applied consistently all across our market, and help to save it. I suggest our industry sets up a temporary “war council” to address the COVID-19 crisis. It should contain senior representatives from all key stakeholders and umbrella organisations. We then need it urgently to publish a code of conduct, with compliance measures, and to set industry ground rules and agreed norms for compromise and enforcement. A piecemeal response, company by company, or even sector by sector, will simply be eaten up by the virus. I have seen enough good practice so far to be confident that our industry can find the right cooperative and comprehensive approach, but even the best industry response won’t be enough on its own. If our strategy is to reach industry saving scale, then the government needs to intervene even further to support, direct and supplement our market’s efforts.

The government’s efforts so far have been welcome, but they have had the inadvertent effect of encouraging the non-payment of rent, whilst doing little to offset the baleful effects of its non-payment. This really matters. Rent is the lifeblood of the real estate markets, and leases are the engines that circulate it. If rental income falls substantially or fails, landlords can’t service their mortgages, pay their staff and shareholders, or meet their operating costs. There is an obvious and potentially very destructive feedback loop here if the June and September quarters are as bad or worse (as June likely will be) than the March quarter. Some fear failing rent streams could detonate a much wider banking and economic crisis. That’s why the government needs to show bravery and vision now - and introduce rent subsidies. Not to favour landlords, but to protect landlords, tenants and lenders - because if a rent-starved market collapses, we all lose. As the BPF rightly points out, 45 million savers and pensioners rely on the UK’s real estate markets. More than almost any economy in the developed world, the UK economy runs on real estate.

We need a government intervention in the rental markets as ambitious as the rescue and fiscal response to the Great Financial Crisis. The government might decide that this help can’t come for free. For example, businesses might be given the option of joining the government’s rent support scheme or not but, if they did, would have to play by its rules. Just as 2010, the government may ask for equity stakes in businesses that reflect the level of rental bail out. Businesses may also be required (as some already are in the USA) to show that they will be good COVID-19 crisis citizens: refraining from all enforcement, reaching constructive compromises (such as lease extensions in return for rent free periods) and supporting the government’s preserve and protect policies. The equity stakes could then be paid back after the crisis and would also have the advantage of making a rental bail out more politically palatable for the public. Some businesses might decide not to opt in, and so avoid the equity stakes and the dividends they would carry, others might decide that dilution is better than disaster. In effect, the state would nationalise the June quarter’s (and possibly further quarters’) rental shortfall to stop it ramifying into a systemic threat to the economy.

Optimism is essential, but the action it demands isn’t always easy. If we grasp this historic moment and come together as a united industry: lenders, owners and occupiers, we can preserve the underlying health of UK real estate. Then, as so many times in the past, its optimism and energy can lead us out of recession and into a new post-virus world.