Boris Johnson’s government has once again deferred the restaurant rent crisis and announced a further extension to the ban on eviction offered to commercial tenants unable to pay rent through the coronavirus pandemic. It comes after the four-week delay to the “full” reopening of restaurants announced by the prime minister on Monday, 14 June, as a result of concerns relating to the Delta variant of the virus. Businesses have been told to prepare for all restrictions to be lifted by 19 July.
The so-called “lease forfeiture moratorium,” first introduced in April 2020 and extended four times in the past 15 months, was due to expire at the end of June but has now been extended until 25 March 2022, chief secretary to the Treasury Stephen Barclay confirmed in the House of Commons this afternoon.
Sky News reports that Barclay said extended the policy struck the “right balance between protecting landlords and supporting those businesses that are most in need.”
Theoretically, it means that restaurant tenants and landlords will now have the rest of the year to negotiate a deal on any unpaid rent accumulated since non-essential businesses were legally required to close in March 2020. In reality, as experts have been saying for months, any tenant and landlord which hasn’t yet reached agreement are unlikely to do so now just because the threat of eviction has been taken off the table for another six months. The key, when ministers confirm the length of the extension in the House of Commons later today, 16 June, will be what else it plans to introduce.
Barclay also said today that legislation would be introduced to “establish a backstop so that, where commercial negotiations between tenants and landlords are not successful, tenants and landlords go into binding arbitration.” How that arbitration works in practice will be monitored closely, since legally speaking right now, the terms of the contract require one party to pay rent to the other. In other words, there isn’t really anything to arbitrate.
While a number of London restaurants have reached agreement with their landlord, there remains an estimated £3 billion in rent debt across the hospitality industry in the U.K. As if that gigantic sum of unpaid money wasn’t evidence enough, in March, the government issued an official “call for evidence” to better understand the reasons behind the deadlock in so many instances. By some distance, throughout the course of the pandemic, rent has presented the greatest existential threat to the restaurant industry in the capital. The crisis has never gone away; it has simply been repeatedly deferred.
As recently as this past weekend, government sources had been suggesting in unofficial briefings that plans were being made for the debt burden to be shared between landlord and tenant, but the latest report is short of detail on what else, in addition to the extension to the ban on evictions, is going to be done.
“It’s very difficult to lift the moratorium without doing anything else,” Adam Walford, a commercial property specialist who represents a number of restaurant operators and landlords in central London at the law firm Howard Kennedy told Eater London this week.
“When you take ... the delay to the final lifting of restrictions, then I don’t think they can just roll the moratorium on. Each time it’s extended, the problem gets bigger,” Walford said. “There does need to be much more structure and framework [for both parties to work with].”
Sky News quotes the prime minister’s official spokesperson saying, “we are considering responses to a recent call for evidence on the next steps with commercial rent and we will set out response shortly.”
While restaurant tenants will await extra detail on how the debt burden could be shared, attention will now also turn to the business rates holiday and the reduced VAT rate, both of which restaurants hope will be extended in line with the delay to the lifting of coronavirus restrictions.