Over the past couple of weeks, a number of property and leisure operators have put forward proposals for the UK Government to support rental payments. A number of bodies have proposed a furlough-style system where the government would pay 80% of the rent for businesses forced to close during the lockdown. This would be known as the Furloughed Space Grant System (FSGS) scheme. A similar scheme has been implemented in Denmark.
A group of food & beverage operators has proposed a #nationaltimeout or #nationalrentfree to support rental payments. This proposal would see the Government ensure that hospitality and leisure tenants get nine months rent-free until the end of 2021. This proposal would also see landlords receive relief on interest payments and loan covenants.
Pros and cons
The FSGS scheme has the advantage of being based upon an existing scheme (furlough scheme) and can be time-limited which would appeal more to the Government. However, this would cost the treasury billions and there would need to be very complex requirements to justify which businesses are eligible for the grants, which would entail a lot of administration.
The #nationaltimeout proposal would not cost the government anything (in theory). However, this proposal would require the Government to agree on numerous lease and loan agreements over a long period of time. Furthermore, going down this road could have a huge longer-term impact on banks and other investors. Other sectors may also demand similar help if the leisure and hospitality sector was granted this support.
Government focus on reopening after lockdown
It is clear to see that the Government is now focusing on how they can reopen businesses after the lockdown. With the Government planning to end lockdown restrictions on 21 June, introducing any new schemes will prove to be an interesting challenge.
How can we help?
At Hawsons we have a dedicated team of leisure and hospitality accountants at our offices in Sheffield, Doncaster, and Northampton. As the sector continues to become ever more challenging, with changes in fierce global, nation and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.
Please get in touch with Richard Burkimsher on 01604 645600 or email [email protected] for more information or help.
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