Business

New emergency rules may help malls to cut rent for shops, and stop evictions

Business Insider SA
Fourways, Mall
Photo: Andrew Thompson/Business Insider South Africa
  • Competitor malls and retailers will now be allowed to negotiate with each other about lowering rent or rental holidays.
  • Government's new regulations are aimed at preventing retailers from going bankrupt during the lockdown period in South Africa.
  • The new regulations will allow the suspension of clauses in lease agreements that restrict some retail tenants from "undertaking reasonable measures" required to protect viability during the national disaster.
  • For more stories, go to Business Insider's home page.

Government has gazetted new regulations that will allow competitor malls to negotiate among each other, and with retailers and restaurants, to lower rent and offer rent holidays.

The three-week lockdown will wreak havoc on shops’ cash flow, as only stores that sell food and basic goods will be allowed to remain open.

On Tuesday, the minister of trade and industry Ebrahim Patel said at a press briefing that many shops and other businesses in shopping malls have already seen a decline in their turnover. “They face significant fixed costs, including rents and costs specified in leases”.

“(The new regulations will) enable tenants who are competitors to meet and to reach agreements with shopping mall owners and to address matters such as payment holidays or rental discounts and limitations on evictions,” said Patel. Usually, malls and retailers are subject to strict competition law requirements, aimed at preventing any form of collusion.

The new regulations will also allow for the suspension of clauses in lease agreements that restrict some retail tenants from "undertaking reasonable measures" required to protect viability during the national disaster.

Initially, only restaurants, personal care services in malls, as well as clothing, footwear and home-textile shops will be included in these regulations, along with malls .

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