UK economy faces ‘long Covid’ unless £2.5bn rent debt problem is solved

MPs warned that businesses face insolvency when a moratorium on rent arrears ends this month

Thousands of businesses have been protected by a moratorium on rent debt built up since March last year (PA Wire)

The UK economy will suffer long-term negative effects from the pandemic unless the government and banks urgently tackle £2.5bn of rent debt, MPs have been told.

Thousands of businesses have been protected by a moratorium on rent debt built up since March last year. The moratorium prevents landlords pursuing tenants for arrears.

Kate Nicholls, chief executive of trade body UKHospitality, told MPs that the rent moratorium, which is due to end later this month, needs to be extended to avoid insolvencies.

She told the Treasury select committee: "You are going to have long Covid for the economy if you are not very careful.

"We currently have £2.5bn in historic rent debt which is going to fall in one hit on 1 July, when the moratoriums end, so we urgently need those extending.

"We are two weeks away from the next quarter rent day, so we need that extended as a matter of urgency and we need the government to work with us, lenders, landlords, to find a solution to this rent debt so we don't start tripping up businesses and causing insolvencies when we should be coming out of this crisis."

Last month the British Retail Consortium wrote to housing secretary Robert Jenrick arguing that unpaid liabilities accrued between March 2020 and the end of June 2021 should be ringfenced and subject to a further six months’ protection from legal action.

The Treasury select committee also heard from Mark Tanzer, chief executive of Abta, who said that government support has not been "adequate" for the impact of the pandemic on the UK travel sector.

He said: "Last week's news regarding Portugal, one of the few countries on the green list, being placed on the amber list, was a real blow.

"It sent a signal to industry and customers that the government is in pursuit of domestic health policy, which we support, and that international travel is not going to come back as envisaged.

"The support measures that have been available have been appreciated but at the margin and not adequate for the scale of the challenge the travel industry has faced and is facing.

"The summer season counts for two-thirds, we are in it, and no one is travelling."