75 per cent of nightlife venues face bankruptcy when rent moratorium ends
There is a £2.5bn pandemic-induced rent crisis brewing in the nightlife industry, according to the Night Time Industries Association (NTIA), which has urged the government today to offer a solution.
Rising rent arrears threatens to bankrupt 75 per cent of commercial tenants in the sector, once the government’s rent moratorium ends in July, the nightclubs, bars, music and entertainment trade body said.
The NTIA has written a letter to the government today, warning of the upcoming ‘cliff edge’, adding that short-term solutions from evictions have been ‘short-sighted’ and have not considered the debt legacy of Covid-19.
“We have always recognised that landlords are victims alongside us operators in the Covid world, but to have full reparations even over time would shift all the cost on to beleaguered operators, many of whom would simply not survive, rendering any public money spent on support wasted,” the chief executive of REKOM UK, which operates 42 nightclubs, Peter Marks said.
Speaking yesterday to a panel of twenty MPs in the All-Party parliamentary group for the Night Time Economy, the NTIA warned that the looming debt crisis will lead to a mass of job losses unless the government steps in.
93 per cent of commercial tenants have already encountered job losses, according to a survey of 360 corporate and SME businesses across the UK, while 70 per cent believe there will be further redundancies when the moratorium ends.
Most of the nightlife sector has been closed to customers since March 2020, which has left with businesses unable to pay rental arrears.
The government put in place a moratorium on evictions in March last year, which is due to expire 30 June, but most venues will not have had enough time to trade and tackle the debt.
“Whilst, of course, we understand the public health reasons why we can not be expected to take the full rent burden alone while receiving no income,” the chief executive of Tokyo Industries, which operates 32 clubs, bars and festivals, Aaron Mellor, said.
The letter said that 80 per cent of commercial tenants are still facing unproductive discussions with their landlords.
Meanwhile, 75 per cent of commercial tenants will be forced to look at insolvency or restructuring if further support is not provided after 30 June.
Solutions
Earlier this year, an inquiry by All-Party Parliamentary Group for the Night Time Economy found that 72 per cent of impacted businesses were over two quarters behind on payments, including over half of nightclubs.
The NTIA has proposed a ‘shared burden’ solution which would see tenants, landlords and the government contribute towards rental arrears to avoid mass evictions.
Its suggestion also seeks to avoid a race-to-the-bottom amongst landlords for the leasing of premises.
The Ministry of Housing, Communities and Local Government have consulted on the issue, but are yet to put forward any policy proposals.
“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,” NTIA chief executive, Michael Kill said.