Tenants will be expected to make quarterly rent payments on June 24
THE introduction of tax credits, property ‘bounce-back’ bonds and a furloughed space grant scheme have been suggested by UK Hospitality to resolve the “stalemate on rent” between landlords and hospitality businesses and allow venues to reopen without “lasting debt around their necks”.
A letter from the industry trade group’s chief executive Kate Nicholls urged chancellor Rishi Sunak to provide fiscal support for rent settlements, saying that despite previous attempts to negotiate, the “ongoing uncertainty” in the trade has made it difficult for partners to agree on outstanding rent payments and that many businesses will be unable to make the quarterly rent payment due on June 24. The group also said the development of a Code of Practice to provide guidance on rent negotiations for landlords and tenants would be “rendered irrelevant” if the government does not agree to extend the current moratorium on commercial landlord sanctions and debt enforcement.
Nicholls called on Sunak to consider the options of a tax credit system to encourage landlords to lower or waive fees by offering them a “partial (50%) offset against future tax liabilities”; a property bounceback bond which would cover all of the lost revenue from the closure period and offer a low or zero interest rate to be paid back over a long period of time; and a furloughed space grant scheme to provide grants to pay a portion of rent payments (up to 100%) which would allow landlords and tenants to come to an agreement of the remaining amount.
The letter also said that the trade group estimates that the cost of the ‘lost quarter’ would be “equivalent to rental payments of around £650million” and that it believes businesses should not be accruing rent if they are forced to close due to circumstances beyond their control; a reduced rate on rent payments should also be agreed when businesses are able to begin trading after the closure period.
Nicholls said: “The stalemate on rent, with the June quarterly rent day fast approaching, is the biggest threat to the recovery and future of hospitality.
“We are moving towards the reopening of the sector and many people, both in and out of hospitality, are keen to see businesses open again. Unfortunately, all the good work in keeping businesses afloat during lockdown and the best-laid plans for restarting, could be completely undone by the impasse on rents.
“As things stand, when June 24 comes around, many businesses will not be able to pay. We have lost an entire quarter’s revenues to COVID-19 and the prospects for trading from July to September look severely limited. Social distancing measures and expectations of low consumer confidence are going to see businesses trading at a fraction of capacity.
“The current moratorium on forfeiture and enforcement action must be extended until the end of the year, to allow government’s proposed Code of Practice to support negotiations. The reality is, though, we are at a point where the government has to step in and act decisively, otherwise businesses will go under, jobs will be lost, and rent will never get paid.
“Fiscal support is now the only option if we want to avoid business failures. The government must consider supporting hospitality businesses who cannot pay rent. A continued stand-off does not help anyone.”