Government must act to prevent hospitality bloodbath

Government must act to prevent hospitality bloodbath

UKHospitality (UKH) has written to the chancellor and the secretary of state for housing, communities and local government warning that failure to act urgently to solve the rent crisis will trigger a “bloodbath” of hospitality business failures, with thousands more jobs lost.

Government has so far shielded these businesses from eviction and the worst aggressive enforcement activity by landlords over the past six months through the lease forfeiture and debt enforcement moratoria. However, these come to an end on 1 October.

There is still substantial unsettled rent from this period within the hospitality sector, an estimated £760m. This will increase with September’s rent quarter payment date looming (29 September), to an estimated £1.06bn. 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.

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.

The letter calls on the government to act in three areas to protect hospitality businesses:

• Extend the moratoria until 31 March 2021
• Ensure County Court Judgements are prohibited for rent debt
• Work with landlord and tenant bodies on levers to encourage negotiations – e.g. mandatory rent reviews where landlords are not negotiating.

UKH argues that the extension of the moratorium for a further six months has numerous benefits. The prospect of a full year without revenue will compel some landlords that have been unwilling to negotiate to come to the table and find sustainable future agreements.