More than 80% of UK hospitality operators believe their commercial terms with landlords will not be sufficient to see their businesses through this next phase of trading restrictions.

Property group Cedar Dean surveyed over 230 leading hospitality and leisure businesses, representing over 2,000 venues across the UK.

The lease restructuring specialist found 69% of operators are being forced to look at restructuring or insolvency, with current rents remaining unaffordable for the vast majority.

Just 38% of respondents have agreed new terms with the majority of their landlords.

David Abramson, CEO of Cedar Dean, said: “The results of our survey clearly show that the commercial property market needs a complete reset. This obviously isn’t business as usual. Many landlords still need to get their heads out of the sand and recognise that covid-19 has changed the game for the long term. This isn’t a 6-12 month issue.

“We’re seeing more CVAs, many of them unnecessary, because there is currently no mechanism for commercial rents to be revised down in the rent review process. However, this is not a quick fix. In the meantime, with over 80% of the sector still needing better terms, landlords and tenants must work together towards win-win agreements so that both parties can survive the current crisis.”

Tom Kidd, director and co-founder of Adventure Bar, which has nine bars around central London, said: “I don’t think people fully appreciate the magnitude of the fallout that’s still to come. Up to 80% of the hospitality sector is locked in a Mexican standoff when it comes to rent renegotiations. If the commercial eviction ban does end on 31st December, as much as 70% of the industry could be out of business early next year.

“Companies are using CVAs to force landlords’ hands. But that’s not good for the taxpayer – whether it’s written taxes or write-downs on pension funds, the general public don’t do well either way. The Government could look at reform to the law around frustrated lease, and there is a strong case for mutual break clauses, giving both operators and landlords the option of terminating agreements that didn’t work for both parties without bringing down the whole company. We are facing a financial timebomb, so why not look at every avenue?”

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