24 March 2020 by Jennie Milsom
Legislation announced yesterday to enact a three-month moratorium to protect commercial tenants unable to pay rent because of coronavirus has been welcomed by landlords and tenants.
The legislation, included in the emergency coronavirus bill, was pushed through Parliament ahead of tomorrow which, crucially, is the quarterly rent day for many hospitality businesses.
Under normal circumstances, landlords would have been able to seize a property 28 days after a missed rent payment. However thanks to the new legislation, no business will be forced out of its premises for missing a payment in the next three months.
Speaking to The Caterer on Tuesday, executive director of Japanese restaurant chain K10 Restaurants, Maurice Abboudi, who closed all five of their London restaurants on 18 March, said it was a great start. “It gives us time to have sensible discussions with landlords and to agree a way forward. Everyone is going to have to do that on their own and a lot of people are already communicating and discussing strategies. Landlords need us to pay rent and we need premises to trade out of. Hopefully sense will prevail and that we can agree something sensible with the landlords.” He added that if the coronavirus crisis continued for more than three months then the situation would need to be reviewed.
In a statement on Tuesday Ibrahim Dogus, chair of the British Takeaway Campaign (BTC), said: “The Government has given the sector some much needed breathing space by ensuring they won’t forfeit their leases if they can’t pay due to cash flow pressures. We now hope that landlords will show flexibility and recognise that their support is critical to ensuring takeaways and restaurants can keep the nation fed during this crisis.”
He went on to say that while the BTC recognised landlords had financial pressures of their own, without their support thousands of takeaway and restaurants businesses were facing closure “within weeks, if not days”.
A spokesperson from property investor and developers Grosvenor, who work predominately with smaller and independent operators, said on Tuesday: “We welcome this logical step from the Government. We are working proactively with our retail and F&B tenants to try and avoid this situation ever occurring and have already offered to waive the quarter’s rent for hundreds of independent and smaller occupiers. We will continue to evolve our response as the situation develops.”
In a statement to the Stock Exchange on Tuesday, Brian Bickell, chief executive of landlord Shaftesbury, which holds real estate in London’s West End, said: “We are committed to supporting our occupiers and residents through this period of unprecedented upheaval in normal patterns of life and business activity. The ability of our commercial tenants to resume trading when current restrictions begin to be relaxed is our priority.”
The statement went on to note that the trust’s portfolio of 607 restaurants, cafes, bars and shops were in “high footfall and spending locations” and, under normal circumstances, served an estimated 700,000 workers in the City of Westminster and tourists, both domestic and from overseas.
There are also reports that landlords are discussing alternative solutions with their tenants, including rent holidays, monthly instead of quarterly rent payments, as well as a suspension of rent payments altogether.
Monday’s news was also “hugely welcomed” by UKHospitality chief executive Kate Nicholls saying that it will help to protect jobs across the sector and that hospitality businesses want to work with landlords constructively during this crisis to find solutions.