Landlords threaten winding up orders over unpaid rent

30-Mar-2020 - Last updated on 30-Mar-2020 at 10:07 GMT

UK landlords are threatening legal action against hospitality operators after many withheld rent to preserve cash during the lockdown, the Financial Times reports.

Pho, Escape Hunt and Caffe Concerto are among those that have been threatened with action.

Caffe Concerto is facing a winding-up petition — a court order that forces an insolvent company into compulsory liquidation — from Criterion Capital, owner of its Haymarket site, after it did not pay a £100,000 rent bill.

The government has acted to protect tenants from eviction with a moratorium on lease forfeitures, however landlords can still act against tenants in other ways, such as winding up orders – although it is understood all such cases have been deferred until June.

Stefano Borjak, director of Caffe Concerto told the FT: “We are facing a serious problem here.

“They are trying to wind up the company, which does £40m turnover per year. The cash flow we have at the moment we need to pay staff.”

According to letters seen by the FT, both Pho and Escape Hunt have also been threatened with action if they do not pay full rent for the next quarter to Sykes Capital, the landowner of their Reading sites.

“We appreciate these are difficult times, however, payment of rent should be one of the highest priority business expenses,” the letter said.

Andrew Sell, head of asset management at Criterion Capital said: “The government at no time has said that commercial tenants should receive a rental holiday, yet many, but not all, are choosing to withhold rent. Such action is jeopardising our obligation to meet our commitments to lenders.”

Some landlords received less than a third of their expected rent on Wednesday after the government granted tenants a three-month moratorium against eviction for non-payment.

Intu, the shopping centre landlord, said it had received only 29% of expected rent, even after offering a deferral and cutting service charges.

Chris Griggs, CEO of British Land, said that it was allowing its smaller tenants a rent-free period but that it had its own costs to pay.

“Look at a very large shopping centre with very few shops open, you have to keep all of it running,” he said.