UKH Warns Sector is on Countdown to Rent Judgement Day Unless Moratoria are Extended

UKHospitality is warning that the sector is on a countdown to a devastating rent tipping-point that will trigger a new year bloodbath of hospitality business failures and potentially hundreds of thousands more jobs lost.

Government has so far shielded businesses from eviction and the worst aggressive enforcement activity by landlords over the past nine months through the lease forfeiture and debt enforcement moratoria. However, these come to an end on 31st December, with the hospitality sector still debilitated by severe restrictions on its ability to trade.

There is still substantial unsettled rent from the Covid crisis period within hospitality, estimated at around £1.6 billion. This will increase further with December’s rent quarter payment date looming (25th Dec). The debt burden is mostly held by otherwise viable businesses that cannot pay rent bills due to lack of revenue during many weeks of closure and suppressed sales under tier restrictions.

Throughout this period, UKH says many landlords have made it clear that they intend to use the end of the moratoria to issue winding-up petitions and eviction notices to tenants, both large high-street chains and individual businesses. The trade association is calling for urgent action by Government to preserve as many jobs and businesses as possible into 2021; encourage commercial landlords and tenants to come together to discuss rent debt and future rental agreements; and help to resolve Covid-19 related debt in a pragmatic and equitable fashion.

UKH believes that Government must immediately extend the moratoria to the end of June 2021 to prevent potentially hundreds of thousands of further job losses in the sector and the failure of thousands of SMEs and well-known brands. This extension will also give time to produce workable solutions to sustainably deal with the build-up of rent debt. This become more important than ever with Government indicating that the sector could still be subject to the harsh tiers restrictions until Spring 2021.

Kate Nicholls, Chief Executive of UKHospitality, said: “An extension to the moratoria is needed immediately, as this issue is threatening the future of so many otherwise viable businesses and their teams. The rent crisis, with the December quarterly rent day and the end of the moratoria fast approaching, is the biggest threat to the recovery and future of hospitality.

“There can be no more excuses about Parliamentary time or available finance; this needs to be resolved, otherwise the support Government has provided to the sector so far this year will all be in vain. The alternative is widespread business collapse and shocking job losses on an almost unthinkable scale. Unless this issue is resolved, there will be a bloodbath on our high streets and a much longer-term damaging impact on the UK economy.”

UKHospitality is proposing a 7-point plan to solve the crisis:

  1. Extend the debt enforcement moratoria until June 2021
  2. Set an advisory level for rent forgiveness in closed sectors of 50%
  3. Tenants to make a reasonable offer of rent debt payment
  4. Introduce 10-year low-cost Government-backed property bonds
  5. A reset rent review
  6. A break clause with a 50% reduction in rent debt
  7. A long-term commercial property review