Gyms face legal action over rent

Image copyright
David Lloyd Clubs

Image caption

David Lloyd says its venues have been threatened with legal action by landlords

Gym and leisure centre bosses say they face being evicted during the coronavirus crisis over non-payment of rent.

Trade body UKActive said urgent action is needed to safeguard exercise venues as unscrupulous landlords use a loophole to threaten eviction.

New rules to protect commercial tenants were introduced last month.

But they don’t prevent landlords from taking steps to force tenants to pay rent withheld because of the lockdown.

“A worrying number have decided to pursue statutory demand notices or winding up orders,” said Huw Edwards, chief executive of UKActive.

“We need the government to act now to direct…that landlords cannot do this.

“With 2,800 gyms at risk of permanent closure, and 100,000 jobs at stake, time is of the essence.”

Section 82 of the government’s Coronavirus Act 2020 came into force on 25 March to help protect commercial tenants.

It banned the forfeiture of commercial leases until 30 June 2020 – or longer if the government deems necessary – for non-payment of rent.

However, the Act does not prevent landlords from taking certain actions, including Commercial Rent Arrears Recovery (CRAR), making a debt claim, issuing a statutory demand, or commencing winding-up proceedings – each of which is lethal to businesses with no income.

The BBC has approached the Department for Business, Energy and Industrial Strategy for comment.

The trade body says it has evidence to show a growing number of cases where landlords are planning to instigate legal proceedings against operators.

UKActive said it expects the first cases to start this week and warned that pubs, restaurants, cafes, cinemas, and retailers could face similar threats.

“Many of our members are faced with the harsh reality of no revenues for a long period, so must take steps to preserve cash, including not paying their rent for the quarter ahead,” said Mr Edwards.

He said some landlords have engaged in constructive discussions to reduce the pressure on tenants, however, a number have decided to pursue statutory demand notices or winding up orders.

Waiver of rent

David Lloyd Leisure, which owns David Lloyd Clubs, appealed to one landlord to request a waiver of rental payments due on 25 March 2020 until the crisis eases and the government allows its clubs to re-open.

Image copyright

Image caption

PureGym says the economic impacts of the coronavirus outbreal are being placed solely on commercial tenants

The request was refused immediately by the landlord and was instead met with the threat of legal action through the issuing of a statutory notice.

“This situation is unfortunately entirely outside of our control,” said David Lloyd boss Glenn Earlham.

“We want to work together with landlords to ensure we can survive this pandemic and emerge with businesses able to continue to pay rent and other costs in the future.”

PureGym has seen similar instances across its facilities.

“The burden of dealing with the economic impact of the Covid-19 pandemic continues to fall on commercial tenants rather than being shared equitably by landlords as well,” said Humphrey Cobbold, chief executive of PureGym.

“Time is of the absolute essence, given that proceedings such as statutory demands and winding up orders threaten to force companies into insolvency within days of being issued.”

Source link