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Government urged to end rent stalemate to save hospitality sector

Published:  18 May, 2020

UK Hospitality has again called on the UK government to intervene in the ongoing rent stalemate to prevent “widespread job losses and business failures” across the sector.

In a letter on Sunday (17 May) to business secretary Alok Sharma, the trade association urged the government to “intervene and broker a solution” to prevent widespread permanent closure in the coming months.

UK Hospitality said that despite a government-backed moratorium on enforcement action for rent, a minority of landlords are still “aggressively pursuing” hospitality businesses, which are being threatened with “winding-up petitions, having deposit funds taken and being served with County Court judgements”.

It added that in circumstances where landlords have offered rent deferrals, the accumulation of further debt to pay back up the line would be “incredibly hard” for operators that will likely be trading at well below normal levels once they are finally allowed to reopen.

“The commercial property market is effectively broken,” it said, citing a recent CGA survey of hospitality business leaders, which found that rent payments and securing landlord agreements were the top priority for 67% of respondents.

With hospitality businesses the first to close ahead of general lockdown, and last to reopen at some still unspecified time after 4 July, the letter outlined an assumption that most would not be able to pay rent for the rest of 2020.

“In June, sector businesses are due to pay nearly £800 million in rent, having been forcibly closed and generated no income for over three months. We appreciate that landlords have their own financial pressures and the majority of landlords have been happy to work with tenants to find solutions, but a damaging minority continue to put pressure on beleaguered hospitality businesses at the worst time,” said UK Hospitality chief executive Kate Nicholls.

“Having discussed this issue with a vast number of industry bodies, it’s clear we need a National Time Out on rent as the vast majority of hospitality and leisure businesses will simply not be able to pay for the rest of the year.”

Nicholls went on to highlight that if a collapse in the commercial rental market would be to the long-term detriment of the wider economy, leading to millions of hospitality workers losing jobs and permanent business closures.

In the UK the hospitality sector represents 10% of employment, 6% of businesses and 5% of GDP, being the third largest private sector employer, creating £130bn in economic activity and generates £39bn of tax for the exchequer.