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Landlords vs tenants: A lesson learned

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Negotiations between landlords and large retail tenants during the Covid-19 lockdown period got heated, with some tenants believing they were within their rights not to pay and landlords arguing this was unlawful.

Yet, after some back and forth, real estate representative bodies, including the South African Property Owners Association, the SA Council of Shopping Centres and the SA Reit Association launched a rental relief initiative where landlords would effectively surrender at least R2 billion in basic rent and operating costs, says Nathalie Schooling, chief executive of customer experience company nlighten.

While this might have been a show of goodwill, she says it is also a sign of how important tenants are for landlords. “Without tenants, landlords cannot exist. 

Without retailers and service providers, there is no economy. It’s important for landlords to remember that their tenants are essentially their customers and not just rent payers or lease holders.”

Given the weak SA economy, she says a lot of larger property companies probably turned to asset buying abroad and are now carrying debt. It can be argued that this is one of the reasons they wanted to hold onto cash when the lockdown was first announced.

“But it is not the responsibility of the tenant to shoulder this burden. The client needs to be put first if property groups stand a chance of long-term survival.” A “big problem” in the property sector, she says, is the disconnect and lack of trust between tenants and landlords.

“Often, top executives in retail property management organisations as well as ‘owners’ have no direct communication with their tenants, leaving it to mid-management to form these relationships. Trust is built by using a customer-centric approach, which has become the number one method used across business sectors, to obtain competitive advantage. It’s time the property sector got on board with this approach.”

Schooling says the way landlords treat tenants is vital for them to retain this client base and that empathy is a key principle in customer experience. If the Covid-19 teaches landlords anything, it is that they should be legally thorough in the future and seek clarity on issues on both their and their tenants’ behalves.

“Legal squabbles over rent, such as those highlighted during lockdown, only waste time and money for all parties. Ultimately, it’s win-win solutions that save the day.

“Engaging in proactive communication with tenants also needs to be top of mind. In times of crisis, rather over-communicate than stay quiet and hope it will all just blow over. It’s in the hard times that landlords can build, or even repair, relationships with their tenants. Showing that they understand their pain points can pave the way for long-term benefit,” Schooling says.

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