Ahead of submitting its formal evidence, UKHospitality has written to the Government urging it to adopt its proposals to help tackle the £2.5bn rent debt crisis that threatens to wreck the hospitality sector’s recovery and risks further widespread job losses.
For more than a year, the trade association has been highlighting the existential threat that rent debt poses to the future of the sector, and the millions of jobs within it.
The Government’s strategy to date – introducing and repeatedly extending a ban on enforcement action – has provided sector businesses with welcome breathing space and protected jobs in the midst of the pandemic.
However, it has not dealt with the huge amount of commercial rent that is still technically owed and which will be demanded by landlords once that ban expires.
In a letter to Communities & Local Government Secretary of State Robert Jenrick MP, UKHospitality warns that while some landlords have adopted a collaborative and supportive stance to tenants, there is also a significant swathe of commercial landlords that have rejected this approach and are being heavy handed and aggressive.
Responding to the Government’s call for evidence, UKHospitality has recommended the following, which align with Government’s options to provide a workable solution:
> Extending the protections for six months after Covid restrictions are removed, targeted at sectors that have been severely affected by Covid
> Expanding the protections to include all enforcement activity, and particularly County Court Judgments (CCJs) which undermine negotiations
> The developing of a national-level adjudication process on ‘legacy rent debt’ that should aim to share the pain of closure (with at least 50% of rent debt written off for this period, and at least 25% written off when the sector operated under restrictions)
> For landlords and tenants to come to reasonable repayment terms, led by guidance and further protections if necessary
> Deals already agreed between parties would not be affected by any adjudication.
UKHospitality Chief Executive, Kate Nicholls (pictured) said, “The time has come to get this issue sorted. As a starting point, our overriding principle is that businesses and landlords have to share the pain caused by enforced closures and restrictions.
'With the right outcomes, we can help to protect the hospitality sector in the short-term and accelerate its recovery – contributing to more jobs and reviving high streets and communities.
“As a sector we are as keen as landlords and other stakeholders for a return to normality but with existing Covid restrictions in place, hospitality businesses are not profitable. We need to see restrictions removed on 21st June and then given breathing space to gauge customer demand.
'We are concerned that the removal of protections would be disastrous and result in a huge increase in enforcement activity – meaning business failures and jobs lost.
“With affirmative action from Government, hospitality can begin to rebuild and be the foundation of a truly national recovery. We will recreate jobs, training opportunities and repair our beleaguered town and city centres in every part of the county. The alternative, to remove protections, is too catastrophic an option to entertain.”