Nightclubs face 'cliff edge' unless Government intervenes in rent crisis

75% of late night venues are facing a bankruptcy cliff edge without a rent debt solution, the NTIA warned MPs.

The Government's rent moratorium is set to end on 30 June, when commercial tenants are worried they will collapse with insurmountable rent arrears.

The trade body addressed MPs in the All-Party Parliamentary Group for the Night Time Economy and called for immediate intervention to protect jobs and save businesses.

In a letter to the Government, the NTIA said the issue had been postponed with a short-term stall on evictions and called for additional measures to help businesses recover from Covid-19.

The organisation surveyed 360 night time businesses and found that eight in ten commercial tenants were still experiencing “productive discussions” with landlords.

Some 75% said they would be forced to look at insolvency or restructuring if further support was not provided post the rent moratorium this summer.

Job losses

What’s more, almost all (93%) of tenants said they had experienced substantial job losses while seven in ten felt there would be further job losses from July.

The survey showed widespread support among tenants for an Australian rent model, which would see tenants and landlords share the rent burden.

The Government has held a call for evidence on the issue of rent debt in the sector but is yet to publish any policy conclusions or proposals from it.

“Time is not on our side and business owners are continuing to take on further rent debt throughout this period of restrictions," NTIA boss Micheal Kill said.

He added: “This will inevitably compromise their future and the regeneration of the industry. 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.”

Cliff edge

“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."

Aaron Mellor, chief executive, Tokyo Industries, which operates of 32 UK clubs, bars and festivals, called on the Government to legislate on sector-specific rent arrears.

As nightclubs have been closed since March 2020, Mellor said the sector could not be expected “to take the full rent burden alone while receiving no income.”

He added: “Commercial leases already consider ‘suspension of rent’ clauses, where a property is not able to be occupied for insured or uninsured losses, this clause could be easily adapted by statute, a sharing of loss between landlord and tenant for the entire sector's onward protection.”

There should be mandatory 50% rent waivers for the closure period, he added.