Thousands of gyms and leisure operators could be forced out of business by crippling rent payments which come back into effect at the end of the month, ukactive has warned.
ukactive is calling on the Government to extend its protection for thousands of tenants who will be asked to pay the rent for the next quarter on 24 June, despite remaining closed since 20 March.
With customers unable to use gyms for the past 10 weeks, many businesses have been forced to furlough the majority of staff to save costs, but are still faced with utility bills and delayed rent payments which they cannot currently afford as they have no income.
A consultation by ukactive with the UK’s leading operators has revealed that many are facing major financial concerns if nothing changes in the coming days.
The Government previously announced it will launch a Code of Practice to protect the high street during coronavirus, and ukactive is calling for protections on rent to form part of the measures if businesses are to survive the crisis.
The date for reopening gyms and leisure facilities is yet to be confirmed by the Government, but will be no earlier than 4 July, based on the existing plans for ‘Phase 3’ of its reopening strategy.
In April, ukactive successfully lobbied the Government to amend the Coronavirus Act to restrict tactics being adopted by landlords who were coercing gyms and leisure centres into paying rent that had been withheld as a result of COVID-19.
The measures announced by the Government included for statutory demands and winding up petitions to be temporarily voided and changes were made to the use of Commercial Rent Arrears Recovery.
Landlords and investors were asked to work collaboratively with high street businesses unable to pay their bills during the COVID-19 pandemic, and the Government introduced temporary new measures to safeguard the high street against aggressive debt recovery actions during the coronavirus pandemic.
However, these protective measures expire at the end of the month, meaning gyms and leisure operators will be liable for large rent payments that they cannot afford, forcing many into administration as they are threatened with legal action through statutory demand notices and winding up orders.
ukactive urges the Government to:
- Extend the Insolvency Bill, with specific emphasis on the Moratorium of Forfeiture, until October 2020 (the end of the third financial quarter).
- Scrap Stamp Duty Land Tax for extending leases during this period.
Huw Edwards, CEO of ukactive, said: “Thousands of gyms and leisure facilities are facing a ticking time bomb with rent payments approaching fast, despite the fact they have been closed for more than 10 weeks.
“Our nation’s gyms and leisure facilities are ready to reopen safely when called upon, and to play a key part in restoring our communities’ health and wellbeing following lockdown.
“However, the Government must ensure that our members are able to open their doors with confidence and unafraid of the imminent threat from landlords as they get back on their feet.
“We need urgent action to provide further protection for gyms and leisure facilities so that they are not forced to close permanently due to unaffordable rent payments, which would be a tragic loss to communities across the UK.”
Sophie Lawler, CEO of Total Fitness, said: “When the time comes, we’ll be ready to serve our members safely and with the same level of service and variety they expect from one of our clubs.
“However, the wall of future liabilities – composed largely of rent – will need unwinding on the other side for some time, thereby compromising our ability to deliver the great social value we provide.
“At a time of great national need, it’s my fear that a lack of support for our landlords will prevent the sector from wholly fulfilling what is an ever-pressing service in the fight against preventable disease.”
Martin Long, CEO of DW Fitness First, said: “Throughout the COVID-19 crisis the industry has shown immense qualities and has rallied together to produce a framework for the safe reopening of our clubs, and at the same time, as operators we have put significant care into looking after our employees and our members, and raised the bar on online workouts and support.
“We are all looking forward to the day when we can reopen our clubs, but the Government must recognise that as a sector we have been, and will be closed, for longer than almost every other sector, and with zero income.
“For the sector’s survival, extended protection from imminent rent demands at the end of June is a pre-requisite to allow the industry time to reopen and to rebuild.”