Government considers proposals to ring-fence hospitality rent debt

By James McAllister

- Last updated on GMT

Government considers proposals to ring-fence hospitality rent debt

Related tags: Rent arrears, Coronavirus

Ministers are weighing up a plan to block landlords from evicting pub and restaurant owners that have fallen into arrears as a result of the pandemic, with a decision due this week.

The Telegraph ​reports​ that officials are considering proposals to ring-fence historic debt built up by pubs and restaurants during Covid-19, in a move which would allow hospitality companies to continue negotiations with their landlords rather than immediately diverting large sums of cash to pay off bills.

It could mean landlords that haven't reached an agreement with their commercial tenants over arrears would be unable to evict them when the lease forfeiture moratorium, which prevents the repossession of commercial premises if businesses are unable to pay their rent as a result of the Coronavirus pandemic, expires at the end of June.

Both Downing Street and the Treasury are understood to have been involved in meetings to discuss what support could be offered to pubs and restaurants, amid expectations that Prime Minister Boris Johnson will announce later today (14 June) that so-called 'Freedom Day' plans to drop all legal restrictions on social contact in England will no longer go ahead on 21 June as hoped, and will instead be pushed back by four weeks.

The Government talks have centred around proposals put forward under a consultation, which ended early last month.

One source told The Telegraph ​that discussions had included what is termed an 'Australian model', which has previously been suggested by hospitality leaders​ as a solution to the mounting rent debt.

Another source said a decision is set to be made by today.

Under Australia’s rent relief scheme, it was made mandatory for landlords to agree to a reduction in rent payable, of up to 100%, in proportion to the reduction in the tenant’s business during Covid-19.

The scheme mandated landlords waive 50% of the total reduction in rent payable and accept deferral of the remaining balance paid back in instalments over the remaining time on their lease.

Landlords were also forbidden from drawing on a tenant’s security for the non-payment of rent during the period of the Covid-19 pandemic and/or a reasonable subsequent recovery period, with banks told to offer leniency on payments owed for the duration of the scheme to ensure landlords remained afloat.

Related topics: Business & Legislation

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