The past week has seen significant changes for all involved in real estate. This article summaries the key points owners and their advisors need to know.
Hospitality and leisure
The big news was the Prime Minister’s announcement on Friday that all cafes, restaurants, pubs, gyms and leisure centres should close that day and not re-open to the public until further notice. The ban does not apply to takeaways. The full list of premises covered by the announcement is:
- Food and drink venues for consumption on-site, such as restaurants and cafes.
- Drinking establishments, including pubs, bars, nightclubs.
- Entertainment venues, including cinemas, theatres, concert halls, and bingo halls.
- Museums and galleries.
- Spas, wellness centres and massage parlours.
- Casinos and betting shops.
- All indoor leisure and sports facilities, including gyms.
Less well publicised was an announcement by the Ministry of Housing, Communities and Local Government that pubs and restaurants will be permitted to trade as hot-food takeaways under a relaxation of the planning rules. You can read that announcement here. Tenant’s leases may contain restrictions on operating as a hot-food takeaway although it would be a brave landlord who sought to enforce a restriction of this nature in the current climate.
We believe that occupiers who trade with a mixture of seated service and takeaways will be able to trade so long as the seating areas are closed and they operate solely as a takeaway.
The Government has published the Coronavirus Bill. This contains new powers to give the Government powers to regulate the use of premises and to control events and gatherings. You can read more about this in our article here.
Commercial rent payments and enforcement
With the March quarter day approaching, there is uncertainty about what will happen on that day. Although there have been lots of rumours that there will be a ban on landlords enforcing rent payment obligations, there has been no formal announcement by the government of their intentions. Landlords and tenants will have to work together to reach commercial arrangements as to how and when rent will be paid.
Residential rent payments and enforcement
The government has announced a complete prohibition on residential landlords taking action to evict tenants for the next three months. You can read that announcement here. To offer support to residential landlords who have buy-to-let mortgages, the three-month mortgage payment holiday will be extended to buy-to-let mortgages. At the end of the three month period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.
The government has provided guidance on the business rates relief offered to premises used within the leisure and hospitality sectors. You can read that guidance here.
The relief is available to properties that are wholly or mainly being used as shops, restaurants, cafes, drinking establishments, cinemas and live music venues, for assembly and leisure or as hotels, guest and boarding premises and self-catering accommodation. Examples of premises that qualify and do not qualify are included in the guidance.
It is only those properties accessible by members of the general public that will benefit from the relief. Head office premises would not, therefore, qualify. Premises that have closed temporarily due to the government’s advice on COVID-19 should be treated as occupied for the purposes of the relief.
The guidance states that the government is applying for an exemption from the State Aid rules and that local authorities “should prepare to award the discount ignoring de minimis limits”.
One-off cash grants
Businesses in the retail, hospitality and leisure sectors will be entitled to receive a cash grant of up to £25,000 per property. For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000. Those with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.
Businesses will be eligible for the grant if they are in the retail, hospitality or leisure sector with premises that are wholly or mainly being used as shops, restaurants, cafes, drinking establishments, cinemas and live music venues, for assembly and leisure or as hotels, guest and boarding premises and self-catering accommodation.
Unlike the rates holiday referred to above, there has been no announcement that the government is applying for an exemption from the State Aid rules in relation to these payments. Hopefully the guidance that is expected to be issued for local authorities (who are responsible for making the payments) will make this clear.
The government has announced that VAT payments for businesses will be deferred until the end of June 2020.