Government pushed harder to ‘intervene on rent’

By Nicholas Robinson contact

- Last updated on GMT

Call for pause on rent payments: the National Time Out campaign is backed by UKHospitality
Call for pause on rent payments: the National Time Out campaign is backed by UKHospitality

Related tags: Coronavirus

Calls for Government to intervene in and broker rent solutions between hospitality businesses and landlords have been stepped up as UKHospitality (UKH) has pressed for a National Time Out.

The campaign, first mooted by CEO of London Union PLC and founder of Hospitality Union Jonathan Downey, is a demand from hospitality businesses​ for landlords to implement a nine-month pause on rents.

Today (18 May), the campaign has been pushed by UKH to the Government in a letter to business secretary Alok Sharma, who is being urged to step in and end the current stalemate between landlords and operators in the sector.

Writing in The Morning Advertiser ​last month, Downey said: “The #NationalTimeOut is a nine-month national payment pause. It would push back the next nine months of rent (April to December), so that no pub tenant pays anything until the first quarter of 2021.

“To make up for this rent-free period, each corresponding pub lease can be extended by nine months (if the landlord agrees) so that payments aren't lost, just postponed.

“And, to help landlords manage and bridge the inevitable cash-flow gap from three quarters of no rent, we do the same push back for them on the next nine months of their loan repayments, where the debt is secured on any pub benefiting from this rent postponement.”

Works for everyone

Downey continued: “This proposal could be something that works for everyone – landlords and ​​tenants – saving 2m jobs without costing taxpayers a penny more.”

If there is no intervention, UKH warned, then widespread  job losses and business failures could be expected in the coming months.

The letter to Sharma highlighted that despite recently announced moratorium enforcement action, hospitality businesses were still being aggressively pursued by minority landlords.

“These businesses, the vast majority of which have virtually no income and are closed during lockdown, are still being threatened with winding-up petitions, having deposit funds taken and being served with county court judgments,” UKH said.

Even in circumstances where rent deferrals have been offered to tenants from landlords, there is a risk of debt being built up, which would be hard to pay back if hospitality businesses’ trade levels track under normal levels in the coming months.

Although the Government has, in the past, urged landlords and tenants to work together on solutions, the commercial property market is “broken”, said UKH.

A recent survey of the sector, for example, showed rent payments and securing landlord agreements were the top priority of 67% of the hospitality business leaders who responded, it added.

A recent survey for The Morning Advertiser ​by HIM/MCA also showed that 88% of the 277 pub bosses asked had either not (60%) reached​ favourable rent terms with landlords or were still in talks (28%).

Solution sought

In the letter, UKH has called on the Government to urgently step in to broker a solution at a high-level ministerial summit and called for:

  • All relevant stakeholders must be involved
  • Government intervention – both financially and legislatively – is necessary
  • The assumption that the vast majority of hospitality and leisure businesses will not be able to pay rent for the remainder of 2020
  • There must be a ‘sharing of the pain’ between tenants, landlords, investors and Government
  • Action must be taken swiftly, with a resolution before the next quarterly rent date at the end of June

The organisation’s chief executive Kate Nicholls said: “In June, sector businesses are due to pay nearly £800m in rent, having been forcibly closed and generated no income for over three months.

“We appreciate that landlords have their own financial pressures and the majority of landlords have been happy to work with tenants to find solutions, but a damaging minority continue to put pressure on beleaguered hospitality businesses at the worst time.

“Having discussed this issue with a vast number of industry bodies, it’s clear we need a National Time Out​ on rent as the vast majority of hospitality and leisure businesses will simply not be able to pay for the rest of the year.

“The Government must step in quickly to help hospitality businesses, landlords and investors find a mutually beneficial solution. We are ready and eager to sit down with all stakeholders to thrash out an equitable solution, with the Government acting as honest broker.

“If the commercial rental market collapses, it will be to the long-term detriment of the whole economy and lead to millions of hospitality workers losing their jobs and swathes of businesses permanently closing their doors.”

Related topics: Property law, UnitedWeStand

Related news