Helen Pratten, EY UK & Ireland Strategy and Transactions Partner - Real Estate, Hospitality and Construction, comments:
“Landlords have largely shown understanding and flexibility throughout the lockdown periods, with both rent reductions and deferrals being common tools.
“There has undoubtedly been a minority of tenants who have refused to come to the negotiating table and landlords who have taken a harder line. These properties are likely to be at risk after the moratorium ends, particularly since it is unclear how the Government’s new rent arbitration process will work in practice. Landlords will be keen to avoid the burden of void units, but do have a responsibility to their investors to ensure fair rents are paid.”
Christian Mole, EY UK & Ireland Head of Hospitality & Leisure, comments:
“A significant amount of rent renegotiation and lease restructurings had already been taking place in the restaurant sector before the pandemic due to overcapacity and unsustainable rent levels which were set during the boom period of branded restaurant expansion in the mid-2010s.
“Perhaps the biggest potential challenge will be for city centre restaurants and bars, where commuting footfall is still yet to return to pre-pandemic levels – and may never do so. Given the resulting reduced turnover, together with continuing inflationary cost pressures on labour, food and energy as well as well-documented supply chain challenges, it seems unavoidable that there may be some further degree of site closures following the end of the moratorium.”