Calls are growing for the Government to create a six-month lease forfeiture moratorium to prevent landlords from evicting operators for non-payment of rent.
The call to action comes in advance of 25 March, the date that thousands of hospitality businesses will have to pay their quarterly rent bill.
With many restaurants now closed across the country, many fear they will be unable to make their rent payments next week.
MCA has contacted a number of major landlords about their position on the issue, including Shaftesbury, The Crown Estate, British Land, Cadogan, Capco and Grosvenor Estates.
London Union founder Jonathan Downey, who is leading calls for Government intervention, said: “Tens of thousands of cash-strapped hospitality operators won’t have the time or leverage to negotiate individual payment plans with uncooperative landlords.
“Government can do something quick and effective and cut through all this.”
MCA contacted a number of major landlords about their position on the issue, including Shaftesbury, The Crown Estate, Cadogan, Capco and Grosvenor Estates.
Revolution Bar Group has decided to suspend rents amid cost cutting, while MCA understands a number of other operators are considering such a move.
Craig Rachel, director of corporate finance at AlixPartners, said while there was no government guidance on this, it was a logical step.
He told MCA: “Realistically there’s going to be a lot of people who put landlords at the back of the queue. People are focussing on how they can pay their staff for as long as possible
“If you’re going to close sites, you’re going to have to make some people redundant, put some on unpaid leave, or give statutory sick pay.
“Everyone is focussing on getting as much cash as possible to pay their staff, as they’re the people that are going to be most affected.”
Kings Cross landlord Argent has announced a three-month rent-free period, but Downey said this was not typical of the industry.
He said: “Some of the institutional landlords are doing good things. Especially Grosvenor and Capco, as I understand it. Plus there are others like them.
“But my view is that 75% of landlords aren’t going to want to know about your cashflow challenges and they will be pressing for payment in full next week or monthly at best.
“This is the commercial reality and smaller operators don’t have the leverage to force through new payment plans or postponements.
“If the Government doesn’t do something along the lines of the forfeiture moratorium I have suggested, then in the next few weeks, thousands of locks will be changed and premises repossessed. It is inevitable.”
Rachel added that though landlords may not like it, they would be limited in what action they could take in the circumstances.
“How will the landlords react? The question is, what are they going to do? Breach of contract, terminate leases - will they do that? Probably not.
“I wouldn’t be surprised if the government at some point provides guidance on best practise
“Most companies have rent quarters. People pay three months up front. I don’t think anyone in their right mind would do that at the moment.
“The best-case scenario for landlords would be to move to monthly payments.”
A senior property director said he was in the middle of around 25 negotiations with landlords of all sizes and am seeing a range of responses “good and bad”.
‘Realistically, landlords are at the back of the queue’
Calls are growing for the Government to create a six-month lease forfeiture moratorium to prevent landlords from evicting operators for non-payment of rent. The call to action comes in advance of 25 March, the date that many hospitality businesses pay their quarterly bill. London Union founder Jonathan Downey, who is leading calls for government intervention, said without action “thousands of locks will be changed and premises repossessed… It is inevitable.” Craig Rachel of AlixPartners said many operators would put landlords ”at the back of the queue”.