Rent crisis will leave ‘bloodbath’ without resolution

A failure to act urgently to solve the rent crisis will trigger a “bloodbath” of hospitality businesses and thousands more jobs lost, UKHospitality has warned the Chancellor.

Operators have been so far shielded from eviction and the worst aggressive enforcement activity by landlords through the lease forfeiture and debt enforcement moratoria, however these come to an end on 1st October.

There is still substantial unsettled rent from this period within the hospitality sector, an estimated £760 million.

This will increase with September’s rent quarter payment date looming on the 29th, to an estimated £1.06 billion.

This debt is mostly held by otherwise viable businesses that are not able to pick up the rent bill due to loss of revenue in Q2 and the slow return to business.

UKH says many landlords have already made it clear that they intend to use the end of the moratoria to issue winding-up petitions to tenants, both large high-street chains and individual businesses.

The letter calls on the Government to act in three areas to protect hospitality businesses: extend the moratoria until 31 March 2021; ensure county court judgements are prohibited for rent debt; and work with landlord and tenant bodies on levers to encourage negotiations e.g. mandatory rent reviews where landlords are not negotiating.

UKHospitality CEO Kate Nicholls said: “The rent crisis, with the September quarterly rent day fast approaching, is the biggest threat to the recovery and future of hospitality. The sector has enjoyed a much-needed boost through August with the successful Eat Out to Help Out scheme which brought people back into our venues to enjoy the pleasure of eating and drinking out.

“But a huge economic shadow hangs over the sector; as things stand, later this month, many businesses will not be able to pay rent that is due. Landlords will be able to take back the keys and thousands of sites and the jobs they support will be lost.

“More time is needed to come to agreements. A moratorium that goes on until the end of March 2021 will allow businesses to trade through Christmas and New Year. With the ‘rule of six’ in place, that period is undoubtedly going to be tough but at least should generate more cash than had been possible in the closure period, putting tenants into a stronger position to repay debt accrued.

“While the hospitality sector has suffered through this crisis, we appreciate the landlord community has too. We would be keen to work with Government to build on our constructive partnership to ensure any future moratorium is targeted at those most in need and, potentially, conditional so that it brings parties together.”