Most hospitality businesses are leasehold and the next quarterly rent payment is due on 25 March, but failure to pay means landlords can seize the property within 28 days.
This would mean measures to protect staff, such as the Government pledge to pay 80% wages of those who cannot work due to the Coronavirus outbreak, will be rendered meaningless if their employer’s business is taken back by landlords.
UKHospitality says a moratorium – a legally authorised period of delay in the payment of a debt – would give restaurants and pubs breathing room before the first payments of the Government’s job retention scheme come through in the next month.
London Union's Jonathan Downey, who is leading calls for government intervention, says: “This is vital for cashflow to save businesses and jobs. Without this moratorium many more jobs will be lost. If locks are changed and premises repossessed, businesses will fail and there will be no employer left to pay over the 80%.
“Nothing is more important than this right now and we have to see something [announced] in the next few days.”
Downey is calling for a six month moratorium to prevent landlords from taking back premises for non-payment of rent on the 25 March and 24 June quarter dates.
He wants this to be coupled with a debt enforcement moratorium to protect landlords who are unable to collect rent.
Kate Nicholls, CEO of UKHospitality says: “Our analysis suggests the quarter rent day for bars and restaurants is worth billions of pounds. This is money that simply isn’t in the system and most businesses cannot pay.
“We want to work with landlords and government to find solutions. We are asking government to look at extending the legal moratorium on forfeiture to include commercial leases - to protect lessees, landlords and most importantly help support and pay our staff.
“This will give us the time we need to negotiate and to focus on our teams. This remains the single biggest obstacle for the sector and unless we find a solution to this issue, it could undermine all of the Government’s great work to date.”