Three quarters of nightlife venues face bankruptcy without rent solution

pub & bar

By James McAllister

- Last updated on GMT

Three quarters of nightlife venues face bankruptcy without rent solution MPs warned by the Night Time Industries Association (NTIA)

Related tags: Rent arrears, Coronavirus, Night time economy

MPs have been warned that spiralling rent arrears threatens to bankrupt 75% of commercial tenants in the night-time economy once the lease forfeiture moratorium expires at the end of June.

In a written plea to Government, the Night Time Industries Association (NTIA) has called for a solution to the £2.5bn rent crisis facing nightlife operators as a result of the Covid-19 crisis.

It comes after the NTIA told a panel of twenty parliamentarians in the All-Party Parliamentary Group for the Night Time Economy yesterday (12 May) that the debt crisis requires immediate intervention from Government and will, if not resolved, result in hundreds and thousands of job losses.

Commercial tenants that are unable to pay their rent as a result of the Coronavirus pandemic are currently protected from eviction by the lease forfeiture moratorium, which was introduced in March last year and has been extended in quarterly increments ever since.

It is now scheduled to end on 30 June, by which point it is hoped all operational restrictions imposed on the hospitality sector would have been lifted.

In its letter to the Government, the NTIA expressed frustration that postponing the issue with a short-term reprieve from evictions has been short-sighted and perfunctory, with no real understanding of the generational debt legacy wrought by Covid-19.

It notes that large swathes of the nightlife sector have been closed since March 2020 with no meaningful opportunity to open and trade. As a result, businesses have been unable to pay rental arrears, through no fault of their own, and have accrued considerable debts.

The prospect of repaying these debts for most in the sector, it adds, is largely unattainable.

The letter contains the findings from a new survey of 360 corporate and SME businesses across the UK, which found that 80% of commercial tenants are still facing unproductive discussions with their landlords; 75% of commercial tenants will be forced to look at insolvency or restructuring if further support is not provided post the rent moratorium; and 93% of commercial tenants have encountered substantial job losses, with 70% believing there will be further redundancies post-moratorium.

Additionally, 92% of respondents are in favour the Government implementing a rent relief scheme similar to that introduced in Australia, currently being championed​ by The Piano Works CFO Peter Thornton, which shares the burden for arrears between tenants and landlords.

An inquiry by All-Party Parliamentary Group for the Night Time Economy earlier this year found that 72% of impacted businesses were over two quarters behind on payments, including over half of nightclubs, and 32% of live music venues now three quarters in arrears.

As the Government prepares to remove the forfeiture moratorium, commercial landlords will once again be able to evict operators in the sector and this, the NTIA warn, will cost jobs and livelihoods, hamper the wider economy, and waste the public money spent on supporting these venues to date.

“Time is not on our side and business owners are continuing to take on further rent debt throughout this period of restrictions; this will inevitably compromise their future and the regeneration of the industry," says Michael Kill, chief executive of the NTIA.

"This needs urgent Government intervention and will require the Government to bring forward a policy that allows tenants, landlords, and government to share the burden of debt from rent arrears.
“Consideration must be given to a more robust code of conduct or adjudication process, which will require some mandatory or legislative elements within it, to ensure that everyone comes to the table to resolve this appalling situation we find ourselves in.

"We must avoid this cliff edge."

Last month the Government held a call for evidence to help monitor the overall progress of commercial rent negotiations​​​ and assess whether it needs to take further steps to protect businesses.

Related topics: Pub & Bar

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