Retail and hospitality bosses today called on Government to intervene to prevent more job losses as a stand-off with landlords over rents looms.
In April, Downing Street introduced a moratorium on business evictions which ends on September 30, shortly after the next quarterly rent day where tenants have to pay for the next three months’ occupancy.
Some tenants have agreed six-month rent holidays with landlords, but many have not and now fear they will be unable to pay the outstanding rent, after suffering three months of closure in lockdown. Thousands of High Street jobs have been lost in the Covid crisis.
Retail, restaurant and landlord lobby groups this month called for a Property Bounceback Grant, which would see the Government fund up to 50% of rent and service charges owed. Failing that, retailers and restaurants want an extension to the moratorium.
The Eat Out to Help Out scheme has helped trading in August, but restaurateurs remain concerned.
Hospitality entrepreneur Hugh Osmond, who built up PizzaExpress and runs the Coppa Club chain, said: “If something is not done about the backlog then we are going to see huge number of closures. Even among the big chains there is no one that has the cash to afford six months of back rent.
“Some of the most enlightened landlords have said that they will give six months rent free but the majority have not, and haven’t even engaged in discussions on rent. Even with furlough and not paying rents and rates restaurants still lose money as you have bills to pay for non-furloughed staff, building maintenance, repairs.
“The VAT concession has meant that some businesses that would have lost money at their current prices can just about make money. But it’s the backlog that’s the real issue.”
David Page, the chairman of Fulham Shore, which owns the Franco Manca and the Real Greek chains, said: “85% of landlords are being reasonable and offering us some waiver, relief or lower rent based on us having to close sites for the pandemic. But 15% are just being stupid and nasty.”
The moratorium encouraged landlords to be reasonable and do deals. I would like to see the government extend the moratorium, not for ever and a day, but for a further 6 months. This would encourage both parties to thrash out reasonable compromises within that time frame.”
Restaurant industry sources said a Westminster intervention is expected imminently. A Government spokesman said it “recognises the huge challenges faced by commercial tenants and landlords”.
UKHospitality’s chief executive Kate Nicholls said: “There remains a huge sum of rent unpaid and many businesses will never be able to pay this debt and many landlords cannot afford to sustain losses of this scale. We need the Government to step in and provide rent support, otherwise we will see more businesses closed and the needless loss of hundreds of thousands of jobs.”
Stores are also under pressure, as Covid has accelerated the shift to online shopping.
JD Sports executive chairman Peter Cowgill called for the moratorium to be extended, arguing retailers need more time to build revenues back up after lockdown.
He said: “I would welcome it because it gives us more opportunity for realistic negotiations on rent. I’d like to see it extended by six months. The longer the better. I think that would hopefully bring about more realistic discussions.”
Helen Dickinson, chief executive of the British Retail Consortium, “Retailers in London and other major cities, are facing a disaster of low footfall, low sales and higher costs. The rent bills that accumulated during lockdown risk putting some of these shops out of business.
“The BRC, along with other commercial tenants and landlords came together to urge the Government to intervene through a Bounceback Property Grant, where landlords, tenants and Government could share the burden of rents. If the Government cannot implement such a scheme soon, retailers will need an extension to the moratorium on rent collection or risk further shop closures and job losses.”
The British Property Federation, however, said the moratorium must end because it “continues to fuel the non-payment of rent among large, well-capitalised businesses”.
BPF boss Melanie Leech said: “Businesses who are hiding behind the moratorium, who can pay but won’t pay rent, are putting at risk property owners’ ability to support those who are truly vulnerable, and the future of our high streets.
“As coronavirus’ impact endures, however, many otherwise viable businesses will be, through no fault of their own, at imminent risk of failure. Both tenants and property owners will be facing a bleak future, stores will close and jobs will be lost if Government doesn’t step in to support those tenants and property owners who are working together to try everything possible to survive.”
A government spokesman said: “This government recognises the huge challenges faced by commercial tenants and landlords during this period and we’re working closely with them to ensure they are supported. We urge both landlords and tenants find solutions that work for both parties, and published a Code of Practice in June to support these negotiations.”
The spokesman added: ““We’ve taken unprecedented action to protect jobs and livelihoods, with a package of around £160 billion of support, including loans, rates relief and grants for businesses.”