The government has called for evidence on commercial rent debts, signalling a step forward in addressing arrears accumulated by hospitality tenants during the pandemic.
If there is evidence that "productive discussions" between landlords and tenants are not taking place, which represents a "substantial and ongoing threat to jobs and livelihoods", the government will "not hesitate to intervene further", it has said.
The measures which are the subject of this call for evidence are:
- the moratorium on commercial lease evictions
- the restrictions on the use of Commercial Rent Arrears Recovery (CRAR)
A statement about the consultation on Gov.uk reads: "The government’s objective is to gather more evidence to understand how landlords and tenants are responding to the build-up of rent arrears that has occurred as a result of businesses being unable to trade normally during the pandemic.
"This will inform a better understanding of the risk to economic recovery posed by remaining rent debts, and to understand how landlords and tenants are adjusting existing lease terms to reflect the period of recovery that many tenant businesses will need once the trading restrictions are lifted. The evidence gathered will inform government policy regarding the exit from the existing measures and any need for additional measures to preserve viable businesses and the jobs that they provide."
UKHospitality has welcomed the move. CEO Kate Nicholls said: “It is very positive that government has finally appreciated the need to consider additional measures in the commercial lease market.
“After a year of lockdown and restrictions rent debt in the hospitality sector has topped £2 billion and businesses still face months without being able to trade profitably. This level of debt simply cannot be paid off in the short-term. There must be sustained and targeted support to allow tenants and landlords to reach agreement. This must include measures from landlords to write off a level of Covid-related debt.
“It is encouraging that government has recognised that uncertainty over reopening dates has made it almost impossible to find agreement, and even after reopening it will take time for businesses in sectors like hospitality to return to pre-pandemic trading levels. As Government has recognised it will take longer for our sector to adjust and that is why ongoing protection is needed. All businesses will hope to reach an amicable agreement with their landlords but as the document highlights the risk of failure to do so is further economic harm, leading to higher unemployment.
“We will engage actively with our members and government on a response ahead of the deadline on May 4.”