UKH warns hospitality sector at ‘rent tipping point’

UKHospitality has warned that the sector is on a countdown to a “rent tipping-point” that will trigger a new year of hospitality business failures and potentially hundreds of thousands more jobs lost.

The government has reportedly so far shielded businesses from eviction and the “aggressive enforcement activity” by landlords over the past nine months through lease forfeiture and a debt enforcement moratoria.

However, this is due to come to an end on 31 December, with UKH suggesting the sector is still “debilitated by severe restrictions” on its ability to trade, adding that there is still unsettled rent from the Covid crisis within hospitality, estimated at around £1.6bn.

UKH claimed the debt burden is mostly held by “viable businesses” that cannot pay rent bills due to lack of revenue during lockdown periods and declines in revenue sales under tier restrictions.

Throughout this period, UKH said many landlords have made it clear that they intend to use the end of the moratorium to issue petitions and eviction notices to tenants in both high-street chains and individual businesses.

The trade association has called for “urgent action” by the government to preserve as many jobs and businesses as possible into 2021.

The association wants the government to “encourage” commercial landlords and tenants to discuss rent debt and future rental agreements, and help resolve Covid-19 related debt in a “pragmatic fashion”.

UKH has now proposed a seven-point plan to solve the crisis which includes, an extension of the debt enforcement moratorium until June 2021, and setting an advisory level for rent forgiveness in closed sectors of 50%.

Tenants should also be made reasonable offers of rent debt payment and an introduced ten-year low-cost government-backed property bonds.

Kate Nicholls, chief executive of UKHospitality, said: “An extension to the moratoria is needed immediately, as this issue is threatening the future of so many otherwise viable businesses and their teams.

“The rent crisis, with the December quarterly rent day and the end of the moratoria fast approaching, is the biggest threat to the recovery and future of hospitality.”

She added: “There can be no more excuses about Parliamentary time or available finance; this needs to be resolved, otherwise the support the government has provided to the sector so far this year will all be in vain.

“The alternative is widespread business collapse and shocking job losses on an almost unthinkable scale. Unless this issue is resolved, there will be a bloodbath on our high streets and a much longer-term damaging impact on the UK economy.”