While UKH has highlighted that the Government has thus far shielded businesses from eviction and aggressive enforcement activity by landlords over the past nine months through the lease forfeiture and debt enforcement moratoria, the body has claimed that their expiration on 31 December could trigger widespread business failures and job losses.
The trade body estimates that there is still an estimated £1.6bn in unsettled rent from the Covid crisis period hovering over the hospitality sector, which will increase further with December’s rent quarter payment date on 25 December.
The debt burden is mostly held by otherwise viable businesses that cannot pay rent bills due to lack of revenue during weeks of closure and suppressed sales under the Government’s tier restrictions, which have severely hampered business’ ability to trade.
UKH now claims that many landlords have made it clear that they intend to use the end of the moratoria to issue winding-up petitions and eviction notices to tenants, both large high-street chains and individual businesses.
Immediate extension needed
UKH believes that the Government must extend rent moratoria to the end of June 2021 to prevent potentially hundreds of thousands of further job losses in the sector and the failure of thousands of hospitality businesses and well-known brands.
“An extension to the moratoria is needed immediately, as this issue is threatening the future of so many otherwise viable businesses and their teams,” Kate Nicholls, chief executive of UKHospitality explained.
“The rent crisis, with the December quarterly rent day and the end of the moratoria fast approaching, is the biggest threat to the recovery and future of hospitality.
“There can be no more excuses about Parliamentary time or available finance; this needs to be resolved, otherwise the support Government has provided to the sector so far this year will all be in vain.
“The alternative is widespread business collapse and shocking job losses on an almost unthinkable scale. Unless this issue is resolved, there will be a bloodbath on our high streets and a much longer-term damaging impact on the UK economy.”
In light of this, UKH is calling for urgent action by Government to preserve as many jobs and businesses as possible into 2021; encourage commercial landlords and tenants to discuss rent debt and future rental agreements; and help to resolve Covid-19 related debt in a pragmatic and equitable fashion.
The trade body has proposed a seven-point plan to solve the crisis:
- Extend the debt enforcement moratoria until June 2021
- Set an advisory level for rent forgiveness in closed sectors of 50%
- Tenants to make a reasonable offer of rent debt payment
- Introduce 10-year low-cost Government-backed property bonds
- A reset rent review
- A break clause with a 50% reduction in rent debt
- A long-term commercial property review
UKH wrote to the Chancellor of the Exchequer and the Secretary of State for Housing, Communities & Local Government, in September urging the Government to extend current rent moratoria until 31 March 2021, ensure county court judgements are prohibited for rent debt and work with landlord and tenant bodies to encourage negotiations.