Property Bounceback Grant could solve ‘rent crisis’

A collective of trade bodies, including UK Hospitality, have come together to call for a Property Bounceback Grant to help rent negotiations between landlords and tenants, and potentially safeguard hundreds of thousands of jobs.

Trade bodies are calling for the UK government to help tenants and landlords solve the ‘rent crisis’

UK Hospitality, the British Property Federation (BFP), the British Retail Consortium (BRC), Revo and UK Active are calling on the UK government to introduce the grant scheme to solve the ‘rent crisis’ currently affecting the hospitality, retail and leisure sectors.

The UK government introduced a three-month rent forfeiture moratorium in March this year, which prevented landlords from repossessing commercial properties where tenants were unable to pay their rent. The measure was extended in June, offering tenants protection until 30 September 2020.

Now, the five trade bodies are asking the government to invest in the short term through a Property Bounceback Grant to support businesses and landlords whose livelihoods have been closed due to the pandemic, in order to obtain long-term economic, employment and social gain.

Analysis from the trade groups suggests that if the government covered 50% of unpaid rents across hospitality, retail and leisure for six months, it would cost £1.75 billion (US$2.29bn). However, the total return to the Treasury in terms of tax revenue from economic activity would be close to £7bn (US$9.18bn) – an almost 400% return on investment. It would also save 375,000 jobs.

Furthermore, the trade bodies explained that if the rent coverage was extended to businesses that have already agreed rent payments with their landlords, the cost to the government would rise to £4.7bn (US$6.16bn), but the return would also increase to £11bn (US$14.42bn) with more than 630,000 jobs saved.

The grant’s proposed features include government grants of up to 50% of rent and service charges between March and September 2020. In addition, grants would be conditional on an agreement between the landlord and tenant to account for the remaining 50% of the rent and service charges through the government’s Code of Practice.

It would also be targeted towards businesses that were closed for the longest and unable to generate revenue.

The on-trade in England was ordered to close from 20 March until 4 July

A joint statement from all five parties said: “Many landlords and tenants are working collaboratively to agree new payment plans, but there remains a significant proportion of rent unpaid. Many businesses will never be able to pay this debt and many landlords cannot afford to sustain losses of this scale.

“Government must step in and provide rent support, otherwise we will see more businesses closed, more jobs gone and more high streets devastated.

“Without urgent action on rents, many otherwise viable businesses are, through no fault of their own, at imminent risk of failure.

“Where both landlord and tenant are able to cover at least 50% of the rent owed, and are able to demonstrate they are working together as economic partners, government should have the confidence to invest in these businesses’ futures and prevent the needless loss of hundreds of thousands of jobs.”

Hospitality Union has been calling for a National Time Out on rent payments to save on-trade businesses, warning that without one bars will not survive the pandemic.

In June, UK Hospitality warned rent is the biggest threat to the hospitality sector.