Turnover rents For better or worse, the impact of the pandemic is having a profound effect on the commercial property market. Since the lease forfeiture moratorium was introduced last year, tenants and landlords have been trying to negotiate new lease terms that suit both parties; often unsuccessfully - a recent study carried out by commercial property restructuring specialist Cedar Dean found that 77% of hospitality operators are currently being forced to look at restructuring or insolvency options, with current rents remaining unaffordable for the vast majority of businesses. A switch to turnover rent, which links rent payments to the turnover achieved at each site, is something many operators have pursued since the moratorium was introduced as a means of limiting liability going forward. And there’s a hope that, over time, this shift could become permanent. “Property costs (rent and rates) in central London are unsustainable,” says Chris Yates, managing director at Cafe Murano. “This crisis and the impact on high streets should lead to revision of business rate structure and the commercial lease model. Fixed rents with five yearly upward only reviews should be a thing of the past. During 2020 many sensible landlords have moved to turnover rents to support tenants and this has to be the model for the future of commercial leases.” Eroshan Meewella, co-founder of Kolamba, shares this view. “Landlords need to accept that the current rental model doesn’t work,” he says. “The move to a turnover based model is the future and has been adopted my many markets around the world. I believe most landlords will move to this.”