Hospitality calls on government to adopt Australia’s 50% rent relief scheme

A number of business leaders are encouraging the UK to adopt a successful rent relief scheme currently being used by businesses in Australia.

Peter Thornton, chief finance officer of the Piano Works, and David Abramson, chief executive of Cedar Dean, are leading the proposal after writing an open letter to the chancellor of the exchequer, Rishi Sunak, as well as a number of other government ministers.

Thornton and Abramson are concerned about the viability of businesses once the deadline for the current rent moratorium passes on 30 June.

The Institute for Public Policy Research (IPPR) predicts that more than half a million UK employers are at risk of collapse without further help, while nine million jobs are at stake without urgent government support.

The proposal suggests the UK should implement a rent relief scheme introduced in Australia, where the government enforced a number of key measures to help commercial businesses affected by Covid-19 closures, including making a 50% reduction in rent mandatory with the remaining balance paid back in instalments.

How the scheme works

Under Australia’s rent relief scheme, the government made it 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 to not draw on a tenant’s security for the non-payment of rent (be this a cash bond, bank guarantee or personal guarantee) during the period of the Covid-19 pandemic and/or a reasonable subsequent recovery period.
• Banks to offer leniency on payments owed for the duration of the scheme to ensure the landlords remained afloat.

“The UK currently does not have a national solution to the rent crisis imposed by the pandemic,” said Thornton. “Viable businesses will be unable to pay rent arrears due to their lack of revenue and the government needs to take drastic action, otherwise we will experience a widespread business collapse and job losses come the end of the moratoria in June.

“Australia’s rent relief scheme will provide a proven and workable solution that works for both the tenant and the landlord.”

Abramson added: “This crisis requires bold steps from government and with many landlords already giving 50% reductions, the Australian model will simply legislate for the landlords that haven’t yet done this. We know this would be a big move, but it would take away so much uncertainty and allow businesses to focus on keeping jobs and rebuilding trade once they can reopen.”

UK businesses in favour of the scheme

• Leonid Shutov, patron/director, Bob Bob Ricard and Bob Bob Cité
• Rob Pitcher, chief executive, Revolution Bars Group
• Tom Kidd, director and co-founder, Adventure Bars
• Menashe Sadik, founding director, Chopstix Group
• Stephen Gee, restaurant Investor, Ceru Restaurants
• Ranjit Mathrani, chief executive, MW Eat
• Alex Salussolia, managing director, Glendola Leisure Group
• Kevin Todd, chairman, Farmer J, Fafa’s, Upham Pub Company, Which Which
• Peter Bell, founder, Commercial Tenants Association
• Sam Harrison, founder, Sam's Riverside
• Ray Jones, chief executive, TalentBanq

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