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Restaurants at risk of eviction as support measure comes to an end

Leighton Bower

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Leighton Bower

Our hospitality team have been warning that restaurants and others in the sector face eviction or a stand-off with landlords, as the Commercial Tenant Eviction Ban comes to an end on 30 September 2020. In this article, Leighton Bower discusses further.

The Commercial Tenant Eviction Ban was brought in during the height of the pandemic and aimed to protect commercial tenants from being forced out of their premises for missing a rent payment. Originally intended to run until 30 June, it was extended until 30 September.

Now as we approach the next deadline for quarterly rent payments, and with the Commercial Tenant Eviction ban coming to an end, hospitality operators unable to meet rent payments face the prospect of evictions.

These concerns have been echoed by UKHospitality and a series of food firms who have written the government asking for additional support to be put in place.

Landlord agreements a challenge

Some landlords and commercial tenants have managed to come to settlement agreements, however chains with different landlords, across different locations are particularly finding this a difficult task.

In other cases, landlords have been unwilling to compromise or enter agreements as they face their own payment demands, such as mortgage repayments to make.

A series of food firms, including Deliveroo, Burger King and Itsu, have come together to call for government backing so that landlords are not be able to claim full back-rent when the eviction ban ends. Instead, rent arrears repayments could be spread across 12 months, they said.

Cashflow a problem

“Rent deferrals may provide short-term solace. However, with other repayments such as from VAT deferrals or CBILS/BBL repayments, to come next year, I fear that this is simply pushing cashflow issues further down the line. What we might find is that rate reductions rather than deferrals are needed, at least as a temporary measure while the hospitality sector and economy finds its feet”.

“The Eat Out to Help Out scheme provided a much-needed boost for many hospitality operators, but the forthcoming rent payments are casting a real shadow of uncertainty and threatening to undo all that good work to get the sector moving again. It is a shame that this falls on the feet of private landlords to resolve and I hope that additional measures can be introduced to support the sector. However, as we draw closer to the end of the eviction ban this seems less and less likely”.

“We urge hospitality operators facing cashflow problems or with issues making their rent payments to speak to their accountant as early as possible. Together, we can review the available options for raising finance if landlord negotiations prove unsuccessful”, said Leighton Bower.

Contact us

If you would like advice on any matter covered in this article or to discuss our range of accounting and advisory services for hospitality businesses, please contact us.

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This information has been produced by Rouse Partners LLP for general interest. No responsibility for loss occasioned to any person acting or refraining from action as a result of this information is accepted by Rouse Partners LLP. In all cases appropriate advice should be sought before making a decision.

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