Revised National Time Out rent plan delivered to chancellor as government warned that time is running out

Jonathan Downey has today sent chancellor Rishi Sunak a revised proposal for a National Time Out (NTO) rent deal for commercial landlords and tenants as he warns time is running out for the government to act.

Speaking to The Caterer the founder of campaign group Hospitality Union said his original “broad brush” NTO proposal to the Treasury in April, which called for the government to press pause on rents for nine months, had not received a formal response.

“Now we need to move to an evolved version of that as things have changed. The NTO should now be for one year, from 25 March 2020 to 24 March 2021. That’s four rent quarters.”

Hospitality Union’s revised NTO is advocating for a rent-free period of up to nine months during the time that businesses are closed, whether due to government order, because physical distancing prevents reopening or for those deemed commercially unviable. The rent-free period would be followed by a period where payments are based on turnover, at 10% of net revenue or a reduced percentage of prevailing rent in the region of 25%.

Downey added: “I don’t think landlords can argue with that. If we’re not allowed to open and take money, we can’t pay rent. They’re just going to have to live with that. And once we are open it’s going to be on a much-reduced basis. We can’t pay full rent, it has to be based on turnover.”

The Hospitality Union founder said the rent-free period should also be limited until the end of the year for operators who had not been able to open and trade at all.

He added: “We thought after the CJRS extension was announced, rent would be the number one priority and they’ve not done anything yet. They’ve told me they’re working on it but I’ll believe it when I see it.”

With the lease forfeiture moratorium due to expire at the end of June, Downey anticipates that 1 July will be “land grab day” as the June rent quarter will be due on top of the March quarter amounting, in many cases, to half a year’s rent due on one day.

“No one’s got that money. We’ve been keeping hold of cash to try to reopen. What is the government doing about it?” he asks.

Downey said that the revised NTO scheme would be voluntary and that large chains or single-site operators who had “already done a deal or had a nice landlord” may choose not to participate. He has calculated that most landlords will still make money from their tenants even if forced to offer long rent-free periods, saying that a national solution on rent is required to "force landlords to the table".

“Hospitality operators support a pyramid of profit and we’ve had to bear the full burden of a government-ordered closure with 100% loss of revenues,” he added.

Downey has dismissed the government’s plan for a new code of practice for landlords and tenants, which is yet to be published as “infuriating and meaningless”, saying that it will result in the loss of a million jobs. The government has said the aim of the temporary code of practice is to support high street businesses and “guide and encourage all parties to work together to protect viable businesses and ensure and swift recovery”.

Downey said: “Landlords will just ignore it. They’re going to do what they want to do – we’ve seen that with the lease forfeiture moratorium.”

Those behind the NTO hope to have the backing of UKHospitality, whose chief executive Kate Nicholls has said that “now is the time for all stakeholders to come to the table and broker an agreement”.

Nicholls said: “Hospitality businesses have seen revenues all but dry up since March, so government intervention is desperately needed – with a sustainable financial plan in place.”