The Government introduced a three-month rent forfeiture moratorium last month, which prevents landlords from repossessing commercial premises where tenants are unable to pay their rent.
However, many operators have spoken in recent days of landlords threatening legal action against them for choosing to withhold rent in order to preserve what cash they can while the Coronavirus lockdown is ongoing.
These threats have included bailiff action and wind-up orders; the latter being a court order that forces an insolvent company into compulsory liquidation.
In its letter to the Ministry of Housing, Communities and Local Government, UKHospitality calls for an immediate extension of the forfeiture moratorium to six months, and a widening of the scope to include broader debt enforcement measures.
“We urgently need action from the Government to provide legal protection for businesses," says UKHospitality CEO Kate Nicholls. "The moratorium on evictions of commercial tenants announced last week does not go far enough, we need a full rental debt enforcement moratorium."
It also urges the Government to ask landlords to use time to renegotiate terms with tenants.
“Rather than use this as an opportunity to work with businesses to investigate rent deferrals or waivers, many landlords have instigated, or threatened to instigate, actions that will cripple businesses and lead to a further loss of jobs on a significant scale,” says Nicholls.
“We have had reports of excessive interest payments applied to rent deferrals, as well as winding-up orders and bailiff action being threatened – at a minimum imposing extra cost to business and at worst threatening their ongoing viability. We have also been alerted to instances where funds have been withdrawn from deposits with top-ups demanded in order to avoid lease terms being broken.
“Landlords are effectively signing a death sentence for many businesses that are just about keeping afloat.”