The hospitality sector has welcomed the announcement of measures to protect commercial tenants including swathes of bars and restaurants that are currently closed and have no revenue to fund rent payments to landlords.
The Government has today announced new measures to prevent aggressive rent collection in the wider commercial sector. The measures will temporarily ban the use of statutory demands and winding up orders where the non-payment is due to Covid-19.
The Government is also laying secondary legislation to provide tenants with more breathing space to pay rent by preventing landlords using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent.
UKHospitality Chief Executive Kate Nicholls said: “This is a very helpful and pragmatic response from the Secretary of State and will give hospitality businesses some very valuable breathing room. UKH has pushed the Government to provide extra protection for businesses, so it is good to see positive action. Many businesses in our sector have no revenue whatsoever coming in, so paying rents has been out of the question for a significant number. This is likely to be the case for the rest of the year and further government action is required to address this for the next nine months.
“This extra space will allow businesses to survive and to find a way to work with landlords. If social distancing measures are to be in place for some time, as we now believe they will, this measure must be extended to ensure that businesses can survive. A cancelation of existing sanctions is also very welcome.
“The majority of landlords have understood the challenges the sector has faced, but these measures were much needed to curb the aggressive behaviour of others which, if left unchecked, threaten hundreds of thousands of jobs.”
Dan Simms, Co-Head of Retail at Colliers International comments on the UK Government’s announcement today with new measures to protect the UK high street from aggressive landlord rent collection and closure: “ This latest government announcement is a welcome move in that it closes the clumsy gap in the hastily created legislation previously announced which prevented a business’ forfeiture for three months but did not deal with statutory demands or winding up orders.
“The statement provides some much needed protection from aggressive landlord moves, which will only take place in a very small percentage of overall landlord and tenant discussions, however it does nothing at all to help, guide, regulate or fund the principal issue facing the sector. The main question is how we will resolve the issue of non-payment of rent in an environment where little turnover is being generated and the profound future impact this has on both landlords and tenants.
“Furthermore, the government’s move gives some clear protections to tenants, which is welcome, but does little to reflect or assist the awful position of many landlords, many of whom have their own obligations to fulfil – either owing money to lenders and therefore potentially have little room to manoeuvre or those who pay out income to the general public via pension payments and dividends etc. Bland platitudes such as “We understand that landlords are facing their own very serious pressures and are concerned about their position with lenders. We are working with banks and investors to seek ways to address these issues and guide the whole sector through the pandemic.” after 5 weeks of lockdown is underwhelming at best! Positive words but no detail of a plan for how to fix the issue.
The Government urgently needs to consider:
-Creating a grant scheme and a system of regulated solutions for furloughed retail and leisure space to assist landlords and tenants to come to an equitable and balanced solution to the question of payment of rent for the March and inevitably also the June Quarter.
-Extending the rates holiday to cover all vacant and non-property to ease the chronic cash flow burden now being felt by landlords. This could be funded by altering the current broad brush rates holiday provisions to vary the relief depending on whether stores are furloughed or still trading.
-Banks and other lenders now need to be drawn into helping create an overall solution, so that the industry can start to work on some constructive and balanced solutions where the inevitable pain is shared between tenants, landlords and lenders with Government assistance to ameliorate the situation.
This is too large a problem to be left ongoing with no clear and effective Government intervention.”
