Business groups call for urgent action on leases to save hospitality sector

A stark warning was issued to the government on Sunday, as business groups said a failure to act urgently to solve the burgeoning rent crisis in the hospitality sector will trigger a slew of business failures.

Trade group UKHospitality (UKH) warned thousands more jobs could be on the line if the government fails to act before current protections end on 1 October.

The government has so far brought in protections for businesses from the most aggressive enforcement activity by landlords through lease forfeiture and debt enforcement moratoria.

In a letter sent to the Chancellor of the Exchequer Rishi Sunak and the Secretary of State for Housing, Communities & Local Government Robert Jenrick the group called for these protections to be extended to 31 March 2021.

Unsettled rent in the past six months now totals up to an estimated £760m ($972.4m), and with looming payments in September, that figure is due to rise to an estimated £1.1bn.

This is mostly held by otherwise viable businesses that are not able to pick up the rent bill due to the almost total elimination of revenue in Q2 and the slow return to business, the group said.

Other demands outlined by UKH were for the government to ensure County Court Judgements are prohibited for rent debt and for the government to work with landlord and tenant bodies on levers to encourage negotiations.

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UKH chief executive 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,” Nicholls continued.

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.

“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,” said Nicholls.

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