Hospitality leaders back calls for Government to adopt Australian rent relief scheme

By James McAllister

- Last updated on GMT

Hospitality leaders back calls for Government to adopt Australian rent relief scheme Lease Forfeiture Moratorium

Related tags Rent arrears Coronavirus Government

Hospitality leaders have backed a call for the Government to implement a rent relief scheme similar to that introduced in Australia to help protect commercial businesses struggling in arrears.

Peter Thornton, Australian CFO of The Piano Works, and David Abramson, CEO of commercial property advisors Cedar Dean, have written an open letter to Government ministers Rishi Sunak, Kwasi Kwarteng, Robert Jenrick and Oliver Dowden, asking them to consider the proposal, which would help to protect commercial tenants once the Lease Forfeiture Moratorium expires at the end of June.

The letter has been signed by hospitality leaders including Bob Bob Ricard & Bob Bob Cité patron Leonid Shutov, MW Eat CEO Ranjit Mathrani, and Sam's Riverside founder Sam Harrison.

Under Australia’s rent relief scheme, it was made mandatory for landlords to agree to a reduction in rent payable, of up to 100%, in proportion to the reduction in the tenant’s business during Covid-19. The scheme mandated landlords waive
50% of the total reduction in rent payable and accept deferral of the remaining balance paid back in instalments over the remaining time on their lease.

Landlords were also forbidden from drawing on a tenant’s security for the non-payment of rent during the period of the Covid-19 pandemic and/or a reasonable subsequent recovery period, with banks told to offer leniency on payments owed for the duration of the scheme to ensure landlords remained afloat.

Thornton and Abramson argue that introducing a similar scheme here would create a viable solution for all parties.

The Government has faced unending calls to introduce more robust rent protections beyond the Lease Forfeiture Moratorium, which prevents landlords from repossessing commercial premises if businesses are unable to pay their rent as a result of the Coronavirus pandemic.

“The UK currently does not have a national solution to the rent crisis imposed by the pandemic," says Thornton.

"Viable businesses will be unable to pay rent arrears due to their lack of revenue and the Government needs to take drastic action otherwise we will experience a widespread business collapse and job losses come the end of the Moratorium in June.

"Australia’s rent relief scheme will provide a proven and workable solution that works for both the tenant and the landlord."

Earlier this month the Government launched a call for evidence to help monitor the overall progress of commercial rent negotiations​ and assess whether it needs to take further steps to protect businesses.

Data published by Cedar Dean back in January highlighted the scale of the rent crisis facing the sector.

The report, which surveyed more than 400 leading hospitality and retail businesses, representing over 10,000 locations across the UK, found that 77% of hospitality operators were being forced to look at restructuring or insolvency options, with current rents remaining unaffordable for the vast majority of businesses.

Only 31% of businesses had successfully agreed new terms with the majority of their landlords, with 73% saying they wouldn't be able to survive the next six months without further support from the Government or their landlord.

Perhaps most starkly, just 1% of those surveyed said they were ‘very confident’ that Government support will be forthcoming; in contrast, 85% say they were ‘not at all confident’.

“This crisis requires bold steps from government and with many landlords already giving 50% reductions, the Australian model will simply legislate for the landlords that haven’t yet done this," says Abramson.

"We know this would be a big move, but it would take away so much uncertainty and allow businesses to focus on keeping jobs and rebuilding trade once they can reopen.”

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