The Government Once Again Kicks the Restaurant Rent Crisis Down the Road

For the third time this year, the government has extended protections for restaurant tenants against eviction — this time until the end of March 2021. It says this will be the last time an extension is granted.

Officially referred to as the “lease forfeiture moratorium”, it is legislative protection for commercial tenants which have been unable to pay rent due to COVID-19. First introduced by the government in March — then extended in June (until September) and in September extended until 31 December — it is designed to give landlord and tenant the breathing space they require to negotiate a deal on rent debt (owed due to reduced revenue during the pandemic) and future payments.

Given it was set to expire in a little over three weeks — during which time businesses were, according to trade body UK Hospitality, “still debilitated by severe restrictions on [their] ability to trade” — the news has been welcomed by industry leaders, though there remains pressure on the government to provide additional support in order to stave off a crisis in the spring.

It is worth remembering that this legislation does not offer a rent break and it does not prevent landlords from charging restaurants rent for the time they are protected — indeed it may in some cases simply increase the amount of debt without necessitating either party to deal with that debt directly. But, the rationale behind the policy, non-interventionist though it is, is that it buys both parties more time, and the opportunity to negotiate deals.

As in the autumn when this protection was extended until the end of 2020, any positive impact is predicated on an economic recovery — in simple terms, more people going to restaurants, more often — and on productive negotiations in the time bought. Both of those are far from certain.

UK Hospitality, which had warned of a “bloodbath” on the high street without the extension has welcomed the government’s decision, but has reiterated the need for long-term support. Extending the moratoria was just one point in a new seven-point proposal issued this week.

Chief executive Kate Nicholls said today: “If it is to be the final extension to the moratoria, then it is absolutely crucial that it is followed swiftly by a cohesive and comprehensive package of recovery measures from the government.”

Nicholls reiterated the call for an extension to the business rates holiday and VAT cut, calling those measures “a must, alongside loans to tenants where landlords have provided rent concessions.”

Beyond that, “the government must facilitate a resolution to the problem of rent debt which has built up over a devastating year,” Nicholls said. “The forthcoming enhancements to the Code of Practice must bring landlords to the table to find a solution. They cannot be allowed to simply wait until April in order to evict and wind-up businesses [a reality which some in the industry have been warning about all year.]

More soon.