Legislation protecting restaurant tenants from eviction during the COVID-19 pandemic will be extended beyond the end of March, according to reports in the Times this weekend.
Confirmation from ministers is not expected to come until later this week or after Prime Minister Boris Johnson presents his “roadmap out of lockdown” a week from now, on Monday 22 February. But property trade bodies are now expecting the lease forfeiture moratorium — a ban on eviction over unpaid rent — to be extended until later in the spring.
Property Industry Alliance Chair Bill Hughes told the Times that it was now a when and how, less so an if. “The government is now distinguishing between leisure and hospitality, which have been hit very hard, and retail, which has been more of a mixed bag,” he said. A tailored approach has been something the hospitality lobby has advanced since last summer.
While no extension made to date has been for less than three months, the government said in December 2020 that the current protection period was final. At that time, the decision to place the nation into full lockdown had not been made. In December last year, trade body UK Hospitality proposed an extension until June 2021.
The current legislation would see restaurant tenants face the prospect of eviction on 1 April, feasibly before they are given the chance to reopen after lockdown. Even the cruellest or most docile of government ministers would recognise a certain injustice in that scenario.
The problem is that any extension of the moratoria is the very minimum required by restaurant tenants and indeed their landlords. For the past 12 months, the issue of rent — how to pay it, or what to do with the accumulated debt when it hasn’t been paid — has been the most important unresolved issue. If it remains unresolved it will inevitably lead to mass closures and job losses.
To date, and with the exception of the publication of a voluntary code of practice designed to aid negotiations, the government has chosen not to intervene in the commercial bargain between two private parties. It is a strategy that hasn’t really worked — a strategy that tenants, landlords, and trade bodies have said wasn’t working throughout the course of last year.
Now, though, at the last possible moment, it appears to have dawned on policy makers that the outcome of doing no more will be much worse than involving itself in that commercial bargain and setting a precedent. What’s more, it will surely realise, economically speaking, that the prospect of mass closures and more job losses isn’t an eventuality it fancies acquainting itself with this summer.
So what can the government do? This is the £3 billion question — the amount of debt thought to be unpaid by hospitality tenants since the beginning of the pandemic.
Without a cancellation of owed rent, the government either needs to grant financial support to reduce the liabilities restaurants face, or it needs to actively help them reach agreement with landlords over repayment plans. Proposals to-date have so far included “turnover rents” — where restaurant tenants pay a percentage of the money they make once they’ve reopened, thus acknowledging any change in their trading cadence. In early December, UK Hospitality laid out a seven-point plan to “solve the crisis”, but the government has consistently ignored the lobby’s suggested courses. That proposal included a mixture of percentage debt cancellation, grants, loans, and reviews designed to make long-term changes to a system which is widely believed to be both unfit for purpose and unsustainable, especially for tenants.
It’s crunch time — on multiple fronts. With a week to go until restaurants get an idea of when and how they can reopen this year, first the government must clarify the details of the one policy which will ensure they can open at all.