Emergency coronavirus legislation delays commercial landlord sanctions and debt enforcement for at least 3 months

Within the last hour, and with just one clear day remaining before rent payments fall due on the March quarter day (25 March), the government has introduced emergency legislation to enact a moratorium on commercial landlord sanctions and debt enforcement for at least three months.

This will have the effect of preventing landlords from forfeiting commercial leases and repossessing commercial premises (including those occupied by hospitality, leisure and gambling businesses) if their tenant is unable to pay its rent within that period of time.

Commenting on this, Kate Nicholls, CEO of UKHospitality has said:

With the next pending rent day falling this Wednesday, this move by the Government is hugely welcome and will help to protect jobs across the sector. The industry has been pressing ministers for several days to act on this crucial issue, and we are thankful they have responded positively to our concerns.

While this removes the immediate cashflow pressure of quarter rent day, the Government has made clear that the negotiation is now with lessee and landlord to reach a solution on payment. Hospitality businesses want to work with landlords constructively during this crisis to find solutions and the hope now is that they enter into meaningful discussions on the optimum way forward.

Before the announcement of this legislation, UKHospitality had earlier today issued the following warning on its website:

UKHospitality, the single voice for hundreds of leisure and hospitality businesses, and millions of workers, has sounded the alarm about the multi-billion pound bill facing under-pressure pubs and restaurants this week.

The vast majority of hospitality businesses are leasehold and the rent is payable quarterly in advance.  The next pending rent day falls this Wednesday (25 March) with penalties in the lease if a payment is made late or there is a default.  These include the landlord being able to seize the property after 28 days.

Given that the vast majority of hospitality businesses are all now closed following Government emergency measures, and have been haemorrhaging cash over the last three weeks due to the Coronavirus pandemic, UKHospitality is calling for the Government to urgently enact a moratorium on commercial landlord sanctions and debt enforcement – as has been announced for residential properties – and signal this intention on Monday or Tuesday.

Kate Nicholls, CEO, UKHospitality, said:

“The reality is that this is a critical week for bars and restaurants in London – and another incredibly difficult one.  Our analysis suggests the quarter rent day for bars and restaurants is worth billions of pounds.  This is money that simply isn’t in the system and most businesses cannot pay.

We want to work with landlords and government to find solutions.  We are asking government to look at extending the legal moratorium on forfeiture to include commercial leases – to protect lessees, landlords and most importantly help support and pay our staff.

This will give us the time we need to negotiate and to focus on our teams. This remains the single biggest obstacle for the sector and unless we find a solution to this issue, it could undermine all of the Government’s great work to date.”

UKHospitality believes that a moratorium on lease forfeiture will help businesses preserve capital until they receive the first payment from the Government’s new Job Retention Scheme. Unless there is a solution to this issue, hospitality businesses will be unable to lead the recovery once this crisis is over.