Rent Debt ‘Threatens Thousands of Hospitality Businesses’

Written by: Keith Tully

Man with rent debtThe billions of pounds owed as rent to commercial property landlords by their hospitality sector tenants threatens the futures of thousands of businesses across the country.

That’s according to surveys carried out by the trade body UKHospitality, which is convinced that the issue of rent arrears in its industry represents a clear threat to more than 330,000 jobs nationwide.

Around 40 per cent of the businesses polled by UKHospitality said they had not had a rent reduction from their landlords despite the periods of closure and the tough trading conditions they’ve endured since the Covid-19 pandemic began.

Polling also suggests that close to three-quarters (73 per cent) of hospitality businesses currently do not know how they can pay off their rental arrears or whether they will ever be able to.

Many thousands of hospitality operators are understood to have reached agreements with their landlords about their rental debts but for others there have been “no concessions and little engagement,” according to UKHospitality.

As a representative of bars, restaurants and cafes across the country, UKHospitality has called on the government to “take affirmative action” to support the businesses in its sector which are under clear financial strain through little fault of their own.

“The issue of rent debt must be resolved in a way that shares the burden as businesses simply cannot be expected to pay their rent arrears in full,” said Kate Nicholls, UKHospitality’s chief executive.

“This is why the government must take affirmative action to help hospitality rebuild and play its part in the economic recovery. There has to be a sharing of the pain caused by lockdowns and trading restrictions.”

Ms Nicholls is calling on the government to extend protections for businesses in rental arrears until the end of 2021 and for a “fair amount” of Covid-related rental debt to be written off.

“The removal of protections [against creditor actions] would be disastrous and result in a huge increase in enforcement activity – meaning business failures and hundreds of thousands of jobs lost,” Ms Nicholls argued in a recent statement.

Making its case for further legal protections for businesses in debt due to Covid, UKHospitality has pointed out that around 10 per cent of all employment in the UK was accounted for by the hospitality sector prior to the start of the pandemic.

Keith Tully

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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