Hospitality Leases and Changes in the Sector

Landlords have been offering up measures designed to ease the pressure on their tenants, such as forgiving COVID arrears, changing fixed rents to turnover rents for an agreed period, agreeing service charge caps and restructuring leases.

In return, we have seen tenants agreeing to give up their break clauses, agreeing to longer leases and refreshing their premises in an attempt to attract more customers and increase footfall.

It is clear that both parties are having to adapt to survive, which is proving to be a sensible way forward not only for the tenant’s survival but also to save the landlord from the headaches of being left with empty premises.

In a further attempt to save the high street, the Government has recently introduced the Levelling Up and Regeneration Bill, which, if passed, will give local authorities the power to put empty high street premises into mandatory rental auctions without the landlord’s consent, amongst other things.

The Government’s stated purpose of the Bill is to “drive local growth, empower local leaders to regenerate their areas and ensure everyone can share in the United Kingdom’s success”. 

The first reactions to the Bill by landlords are that they strongly oppose the proposals and view the powers as a fundamental interference with their basic property rights.

Given the potential for litigation arising from the exercise of these new powers, it remains to be seen whether local authorities will actually choose to use them or not.