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The UK government is under pressure to resolve the € 6 billion rental delay crisis and avoid legal disputes between commercial tenants and landlords. a temporary ban on dismissals next month.
“If the government does nothing you will have blood on the carpet. All you need is a single owner to affect the full payment terms and the whole company could fall apart,” said Kate Nicholls, head of the UKHospitality trading body.
The ban has been lifted since it was introduced in March 2020 and ended on June 30.
In a letter to Housing Secretary Robert Jenrick on Friday, the UKHospitality argued that “there is a moral obligation on landlords to make lease concessions to businesses forced to close”.
He suggests that the government should extend the eviction moratorium until December so that businesses can recover after the lockout ends, and develop an adjudication process to share losses between tenants and landlords by removing at least 50% of the rent debt.
They are hospitality and retail the most affected sectors as a result of the pandemic, after being closed for a long time.
UKHospitality has estimated that £ 2bn will be rented by hospitality companies, as 40 per cent of the premises are still being negotiated with unpaid rent from the owners. Another 20-30 percent are debating how to settle last year’s closing debts, he said.
Ministers have asked tenants and landlords to provide feedback on six possible avenues in the future, and submissions will be by Tuesday. From the end of the ban on evictions, landlords and tenants have ranged from a binding adjudication process.
The Landowners Group, led by British Land, Soil Values and the British Property Federation on Thursday unveiled their proposal. Businesses are arguing that they should pay rent by the end of June, by which time trade will resume as part of the government’s plans to reopen.
They also propose that the paid rent created since March 2020 be fenced off and that tenants be protected until the end of 2021, leaving time to reach agreements on how much to pay, defer, or be paid.
In the absence of an agreement, the owners propose a binding arbitration process. “Eventually you need something to bring people to the table,” said Mark Allan, CEO of Landsec.
Hospitality companies believe the recovery could be sidelined after they are allowed to reopen on June 21, along with business rates ending in late June.
Peter Thornton, chief financial officer of Piano Works, which runs two bars in London, said they have debts to pay £ 687,000 and have not reached an agreement with the two owners to find out when or how the money should be paid. “We have a high financial risk when we come back and negotiate… We are dependent on the tenant,” he said.
David Abramson, Cedar Dean’s chief commercial property consultancy, said the problem is particularly serious for small businesses that don’t have the resources to hire consultants to negotiate with owners.
New Look and The Restaurant Group, among others, have had administrative processes that forced landlords to reduce rents. Over the past fortnight, two National Court rulings have ruled that tenants like Sports Direct, Mecca Bingo and Cineworld will have to pay for the delay.
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