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Rent is ‘biggest threat’ to hospitality sector
Businesses will fail and jobs will be lost unless the UK government intervenes financially to resolve the “stand-off” between tenants and landlords regarding commercial rents, UK Hospitality has warned.
Rent is the “biggest threat” to the on-trade’s recovery and future, warns UK Hospitality
Hospitality businesses in the UK are due to pay their next rent instalment on 24 June. Kate Nicholls, UK Hospitality chief executive, said the quarterly rent payment was the “biggest threat” to the industry’s recovery and future.
The trade body has written to the UK chancellor of the Exchequer and the secretaries of state at BEIS (business, energy and industrial strategy), DCMS (digital, culture, media and sport) and HCLG (housing, communities and local government) highlighting that hospitality businesses that have been “hammered” by the Covid-19 pandemic and will face “difficulty trading for the foreseeable future” will be unable to come to rent settlements without government support.
UK Hospitality also warned that without financial support, the reopening of hospitality businesses, after months of lockdown due to the pandemic, will be at risk.
The letter also explains measures to resolve the deadlock, including the possible introduction of tax credits to incentivise rent waivers, property bounce back bonds to cover lost revenue from the closure period, and the introduction of a furloughed space grant scheme.
“We are moving towards the reopening of the sector and many people, both in and out of hospitality, are keen to see businesses open again,” Nicholls said. “Unfortunately, all the good work in keeping businesses afloat during lockdown and the best-laid plans for restarting, could be completely undone by the impasse on rents.
“As things stand, when 24th June comes around, many businesses will not be able to pay. We have lost an entire quarter’s revenues to COVID-19 and the prospects for trading from July to September look severely limited. Social distancing measures and expectations of low consumer confidence are going to see businesses trading at a fraction of capacity.
“The current moratorium on forfeiture and enforcement action must extended until the end of the year, to allow government’s proposed Code of Practice to support negotiations. The reality is, though, we are at a point where the government has to step in and act decisively, otherwise businesses will go under, jobs will be lost, and rent will never get paid.
“Fiscal support is now the only option if we want to avoid business failures. The government must consider supporting hospitality businesses who cannot pay rent. A continued stand-off does not help anyone.”
The UK hospitality industry has been campaigning for a #NationalTimeOut to help both bars, restaurants and other on-trade venues, and landlords, survive the Covid-19 crisis. The initiative would see venues granted a nine-month rent break until 2021, with landlords given similar reprieve for any loan repayments or interest payments – and at zero cost to the taxpayer.