UKHospitality (UKH) surveyed its members and found rent debt is critical to ensuring the future health the sector.
The trade body responded to the Government’s call for evidence and highlighted more than half of operators (52%) surveyed had not been given a rent extension period, almost three quarters (73%) were unable or didn’t know how to pay their rent arrears and 40% had not been able to reach a deal with their landlord about rent concessions.
UKH boss Kate Nicholls called on the Government to take action and help the sector rebuild and play its part in the country’s economic recovery.
She said: “Our survey shows that while a proportion of operators have been able to strike a deal with their landlords on payment of rent debt, for many there have been no concessions and little engagement on the issue. The issue of rent debt must be resolved in a way that shares the burden as businesses simply cannot be expected to pay their rent arrears in full.
“There has to be a sharing of the pain caused by lockdowns and trading restrictions. Government must extend and expand protections until the end of the year, and force the writing off of a fair amount of Covid rent debt. The removal of protections would be disastrous and result in a huge increase in enforcement activity – meaning business failures and hundreds of thousands of jobs lost.”
UKH also recommended a number of options. One of these is to extend the protections for six months after Covid restrictions are removed, targeted at sectors severely impacted by Covid.
Another recommendation is to expand the current protections to include all enforcement activity, particularly county court judgments (CCJs), which the trade body said undermines negotiations.
Also, UKH recommended the developing of a national-level adjudication on ‘legacy rent debt’, which should aim to share the pain of closure (with at least half of rent debt written off for this period and at least a quarter written off when the sector traded under restrictions).
Furthermore, it also suggested landlords and tenants come to reasonable repayment terms, led by guidance and further protections if necessary, alongside deals already agreed between parties not being impacted by any adjudication.
Nicholls said: “The time has come to get this issue sorted. As a starting point, our overriding principle is businesses and landlords have to share the pain caused by enforced closures and restrictions.
“With the right outcomes, we can help protect the hospitality sector in the short-term and accelerate its recovery – contributing to more jobs and reviving high streets and communities.
“As a sector we are as keen as landlords and other stakeholders for a return to normality but with existing Covid restrictions in place, hospitality businesses are not profitable.”
Too catastrophic option to entertain
Nicholls called for restrictions to be removed next month (Monday 21 June) and then given breathing space to gauge customer demand.
“We are concerned the removal of protections would be disastrous and result in a huge increase in enforcement activity – meaning business failures and jobs lost,” Nicholls added.
“With affirmative action from Government, hospitality can begin to rebuild and be the foundation of a truly national recovery.
“We will recreate jobs, training opportunities and repair our beleaguered town and city centres in every part of the country. The alternative, to remove protections, is too catastrophic an option to entertain.”