The UK faces ‘blood on the carpet’ of more than £ 6bn in rent loans

The UK government is under pressure to resolve a £ 6bn debt crisis and curb the escalation of legal disputes between commercial tenants and landlords, before concluding a deal. temporary ban on eviction next month.

“If the government doesn’t do anything you have blood on the carpet. All you need is a landlord to raise the need to pay and bring down the whole company,” said Kate Nicholls, head of UKHospitality, the business.

The expulsion ban was lifted from introduction in March 2020 but expires on June 30.

In a letter sent by housing secretary Robert Jenrick on Friday seen in the Financial Times, UKH hospitality argued that “there is a moral obligation on landlords… To make rental concessions to businesses forced to close” .

It suggested that the government should increase the eviction rate until December to allow businesses to recover after the lockdown, and create a settlement process to share the losses of tenants and landlords with no less than 50 per cent of the rent debt.

Hospitality and marketing including sectors most affected by pandemic, which was closed for long periods of time.

UKH hospitality estimates that £ 2bn in rent is owed to hospitable businesses with 40 per cent of the premises still negotiating about currently unpaid rent to landlords. Another 20 to 30 percent are still in discussions on how to repay debts from last year’s lockdowns, it said.

The ministers asked tenants and landlords for their views on the six potential ways forward, with submissions needed on Tuesday. This ranges from simply ending the eviction ban to a binding judgment process for landlords and tenants.

A group of landlords, led by British Land, Land Security and trade body the British Property Federation, which put forward their own proposal on Thursday. They argued that businesses would have to pay rent from the end of June, which is when sales would continue under reopening government plans as well.

They also suggested that the unpaid rent established in March 2020 be replenished and protect tenants until the end of 2021, allowing time for them to reach agreements on how much will be wiped out, moved away. or get paid.

If a settlement cannot be reached, the landlords propose a binding arbitration process. “Ultimately you need something to bring people to the table,” said Mark Allan, Landsec chief executive.

Hospitality businesses argue that their recovery could be crippled by paying rent immediately allowing them to open in full on June 21, with a holiday at business prices that also ends at the end of June.

Peter Thornton, chief financial officer at Piano Works, which runs the two bars in London, said they had a rent of £ 687,000 and had not agreed with either of their two landlords when- a or how the money should be paid. “We have a huge financial risk once we can go back and sell… We are at the mercy of the landlord,” he said.

David Abramson, chief executive of commercial property consulting at Cedar Dean, said the problem is even worse for smaller businesses that don’t have the resources to use consultants to negotiate with landlords.

Many large companies including New Look and The Restaurant Group have gone through administrative processes that have forced landlords to cut rent. But in the past two weeks, two High Court judgments have ruled that hackers including Sports Direct, Mecca Bingo and Cineworld must pay arrears.

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