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Restaurant Industry Asks Government to Pay 50 Percent of Rent

With the government yet to intervene, five U.K. trade bodies say it needs to act decisively now

Diners sit at tables on a closed Soho street in summer 2020 Michaël Protin/Eater London

Five U.K. trade bodies have issued a joint call for to the government to help solve the rent crisis, which threatens to ruin the restaurant industry. Together with UK Hospitality, The British Property Federation (BPF), British Retail Consortium (BRC), Revo, and ukactive have asked the government to introduce a “Property Bounceback Grant” — where the government pays half of owed rent for a six month period — in order to facilitate negotiations, and break the current impasse, between landlords and tenants across the hospitality, retail, and leisure sectors.

“Many landlords and tenants are working collaboratively to agree new payment plans, but there remains a significant proportion of rent unpaid,” the trade bodies said. “Many businesses will never be able to pay this debt and many landlords cannot afford to sustain losses of this scale.”

Alongside staffing, rent is usually the biggest cost for restaurants, and similarly, the biggest unresolved issue for the industry. Aside from introducing measures to prevent evictions, and publishing a voluntary code of practice, the government has hitherto adopted a comparatively non-interventionist strategy, appearing to leave what is a “commercial bargain” to be resolved between the two interested parties, tenant and landlord. It hasn’t really worked.

Because of the scale of the crisis caused by the novel coronavirus, “government must step in and provide rent support, otherwise we will see more businesses closed, more jobs gone, and more high streets devastated,” the bodies, which represent both tenants and landlords, argue.

The collective has done its maths homework and says that short-term government investment will lead to long-term economic, employment, and social gain: Analysis commissioned by the five trade bodies found that if government support covered 50 percent of unpaid rents across the retail, hospitality, and leisure sectors for six months, it would cost (the taxpayer) £1.75 billion. However, it says, the total return in tax revenue from economic activity would be almost £7 billion, and 375,000 jobs would be saved — a return on investment, it claims amounts to almost 400 percent.

It also says that the more the government outlays, the more it will receive later down this line, claiming that if rent support were “extended to cover businesses that had already reached rent payment agreements, the cost would rise to £4.7 billion, with a total return of over £11 billion to the U.K. economy, preventing the loss of over 630,000 jobs.”

For all those businesses which were closed through lockdown, no revenue meant no means of paying rent. “For some firms, that debt level is now insurmountable,” the trade bodies point out. Tenants and landlords alike now face the very real risk of business failure, and hundreds of thousands of job losses, they claim.

The group is proposing the introduction of a “Property Bounceback Grant,” first floated in a proposal by UK Hospitality in June. It says now that it is focused on those businesses that were closed for the longest and unable to generate revenue. By this logic, those able to navigate the lockdown through delivery, pivot, and / or essential community provision, would be at the back of the queue for government support. But its authors claim the proposal “aims to solve the rent crisis” for those “disproportionately hit by the crisis” — in hospitality, retail, and leisure.

It would see:

  • Government grants of up to 50 percent of rent and property service charges between March and September (from the beginning of lockdown until when the period in which landlords are legally prevented from evicting tenants expires.)
  • Grants would be conditional on agreement by the landlord and tenant to find (or agree on) the remaining 50 percent of the rent and service charges through the government’s code of practice.

In a joint statement the trade bodies said that the closure period has been compounded by a significant drop in footfall since reopening at the start of July. They now need supporting, it argues: “Without urgent action on rents, many otherwise viable businesses are, through no fault of their own, at imminent risk of failure,” it said in a joint statement.

“Where both landlord and tenant are able to cover at least 50 percent of the rent owed, and are able to demonstrate they are working together as economic partners, government should have the confidence to invest in these businesses’ futures and prevent the needless loss of hundreds of thousands of jobs.”