Rent debt crisis and return of rates cast shadow over hospitality firms

Troubled hospitality operators are facing billions of pounds in rent debt and business rates payments after the Government decided not to extend financial support measures.

Trade groups have called for extension to the rent moratorium, business rates holiday and furlough support after the Prime Minister said that the further easing of lockdown restrictions will be pushed back four weeks.

Hospitality, retail and leisure operators have benefited from a rent moratorium stopping property owners from launching action against their tenants to force them to hand over rent or push them towards insolvency.

However, the current moratorium is due to end June and the Treasury has said it will not extend this despite the decision to delay the fourth phase of the road map out of restrictions.

Nightclubs will continue to remain shut until at least July 19 while other operators will continue to see trading constrained by pandemic measures.

Nevertheless, their landlords will now be able to pursue legal action from the start of July to reclaim owed rent payments.

Last week, the chief executives of trade groups UKHospitality and British Retail Consortium (BRC) told MPs both sectors had accrued a combined £5 billion in rent debt following the pandemic.

Data for the first quarter of 2021 has revealed that only 74% of rent was collected by landlords 60 days after the end of the period after tenants were battered by the pandemic.

Hospitality, leisure and retail operators have also benefited from a business rates holiday since the start of the pandemic.

However, this is set to change to a 66% discount with a £2 million cap from the start of this month.

According to analysis of official Government data by real estate adviser Altus Group, pubs restaurants and nightclubs in England will return to around £1 billion in rent liabilities from July for the next nine months, although many are likely to benefit from the discount.

Robert Hayton, UK president of Altus Group, said leisure and hospitality firms will need more support, which nightclubs in a particularly precarious situation.

He said: “The deviation from the road map means Covid support, particularly rates relief, should be revisited as the largest operators will essentially be returned to normal level of business rates in just over two weeks’ time with the cap on help.”

He added: “1,167 night clubs have been unable to open their doors since the onset of the pandemic and the right to appeal citing the pandemic is retrospectively being removed which is just wrong.”