Hospitality Union calls for nine-month rent break

Jonathan Downey, founder of Hospitality Union, has written to UK chancellor Rishi Sunak asking for a non-government-funded nine-month rent holiday to save more than two million jobs.

Proposed and written by Downey, the National Time Out initiative has been endorsed by other CEOs and senior figures in the UK hospitality sector, including CEOs from Hawksmoor and The Alchemist. It has also been backed by landlords, including the Canary Wharf Group.

The idea would see the next nine months of rent pushed back so that restaurants pay nothing until at least January 2021.

Last month, the UK government introduced emergency legislation to prevent landlords from repossessing commercial properties if businesses are unable to pay their rent during the covid-19 pandemic

In the letter, Downey said: “Fear of the virus and the long-term need for physical distancing will mean that most hospitality businesses will remain shut down after lockdown. Almost all have no immediate prospect of being profitable again and many will fail in the next few weeks and months.”

On Sunday (19 April), MP Michael Gove said hospitality businesses would be among the last to reopen once lockdown measures were lifted in the UK.

Downey’s letter stated: “We estimate that more than half of hospitality businesses and as many as two million jobs will not survive the next few months. We need an extraordinary next measure.

“We need a #NationalTimeOut – a nine-month national payment pause granted to business tenants and to the landlords of commercial premises. A crucial period of payment postponement when commercial rents, and the debt and interest payments secured on those premises, are pushed to the back end of leases and term loans.”

Landlords will also benefit

The plan would postpone rent from 1 April 2020 to 31 December 2020, so nobody has to pay anything until the first quarter of 2021 when rent payments will start again.

Downey suggested that to make up for this rent-free period, each lease could be extended by nine months (if the landlord agrees) so that those payments aren’t lost, merely postponed to the end of the lease.

“Like the 12 months’ business rates break, this #NationalRentFree should be sector specific – applying only to those businesses that have been forced to close by government order, that will be last to reopen and that will take the longest to get back to any kind of normal – hospitality and leisure,” Downey continued.

“To help landlords manage and bridge the cashflow gap caused by three quarters of no rent, we need to grant the same push back on the next nine months of their loan and interest payments (where the debt is secured on premises benefiting from the #NationalRentFree).”

Downey concluded in his letter: “This has to work for landlords too. Cashflow will be critical for many landlords but there is no pain-free and perfect solution. It is early stages, but this feels like it could be an answer and something is desperately needed.

“A #NationalTimeOut, which includes a nine-month #NationalRentFree, will protect countless businesses, save millions of jobs and won’t cost the taxpayer anything.”


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Author: Melita Kiely {authorlink}