Kate Nicholls: landlords and tenants must 'share the pain' to solve rent crisis

UKHospitality has called on the government to incentivise landlords to forgive rent arrears to tackle the industry's growing debt mountain.

Chief executive Kate Nicholls told the government's Business, Energy and Industrial Strategy Select Committee (BEIS) this week that there needs to be a ‘sharing of the burden' between landlords, tenants, investors and government to move past the issue.

Hospitality operators are currently protected from eviction from commercial premises until the end of 2020 after the government extended its moratorium on landlords taking action over unpaid rent.

But there are concerns about the future, with some restaurateurs warning they could emerge from the crisis owing hundreds of thousands of pounds.

Nicholls said: "Unless we find a way of resetting commercial rents we are going to bake in a problem throughout the whole of the recovery period and hamstring people who are going to want to rebuild their businesses post-pandemic.

"Clearly there is a vested interest in all four of those parties in resolving this, so we don't have devastation on our high streets. From a hospitality point of view, that is a very real prospect in January. You only have to look at the company voluntary arrangements that have gone through recently in hospitality."

Landlords are facing a £4.5b rent shortfall by the end of the year, according to analysis of about 125,000 commercial leases by Remit Consulting, a management consultancy.

Nicholls said: "It is clear the government is going to have to act further to extend the moratoriums. We would urge them to take them forward six months to allow those negotiations to happen.

"You need to make sure you've got a principle of shared pain. If the government can step in and incentivise a forgiveness of rent debt or to take on some of the burden, that would be incredibly helpful."

Several restaurateurs have suggested to The Caterer they would like to see the introduction of a furlough-style scheme to cover rents, to assist both businesses and landlords.