Downey proposes revised 12-month rent free plan to chancellor

By Lisa Riley

Published: 09 June, 2020

Hospitality Union founder Jonathan Downey has written a second letter to the chancellor Rishi Sunak with a new proposal for a national time out rent deal.

The revised proposal includes a 12-month national time out, which will be comprised of a rent-free period while a business is closed, plus a turnover rent once open again.

The period is to be retrospective, running from 25 March to whenever the outlet can reopen, and will have the potential to span four rent quarters.

For those sites that have been open for delivery/takeaway for the past few weeks, the rent-free period is limited to the 15 weeks of official lockdown – from the 25 March to 4 July.

Furthermore, under the proposals, all hospitality tenants will be entitled to claim on the basis of government enforced closure, physical distancing making it impossible to operate, or unviability of opening.

For those businesses that are able to reopen from the date lockdown is lifted and dine-in returns, the landlord will decide between tenants paying either a turnover rent (e.g. 10% net turnover) or a reduced rate (e.g. 25% of the prevailing rent under the relevant lease. Tenants would decide whether they wish to participate in the scheme.

“Many will choose not to because they have reached their own deals already or will want to offer more to their landlords where particular circumstances require it (for example large corporate tenants of small, private landlords),” said Downey.

Submitted to the Treasury back in April, the original proposal called for a nine month rent-free period (from April to December) for hospitality, leisure and retail businesses.

Currently, government support on the rent issue is comprised of a debt enforcement moratorium and the Corporate Insolvency and Governance Bill, which retrospectively protects tenants from statutory demands and winding up petitions by landlords dated from 1 March and 27 April.

At present, government guidance is that the on-trade is allowed to reopen on 4 July, although it was reported yesterday that ministers could be aiming to accelerate those plans.

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