'Dogfight' looms as landlords start suing restaurants over unpaid rent

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Some of Britain's biggest landlords have called in lawyers to claw back the rent that shops and restaurants have refused to pay during the lockdown, The Mail on Sunday can reveal. 

Industry insiders said the number of rent disputes between commercial property landlords and tenants hit 200 this weekend. 

Around two-thirds of these are understood to involve legal threats – such as taking tenant firms to court to freeze their bank accounts and having companies wound up. 

In lockdown: Industry insiders said the number of rent disputes between commercial property landlords and tenants hit 200 this weekend

One source said giant property owner Intu, which owns major shopping centres; Criterion Capital, which has a £2 billion portfolio across London and the South East; and Canary Wharf were all taking particularly hard-line stances. 

The boss of the famous Quaglino's restaurant in St James's, London, last night said the disputes risked turning into 'dogfights'. 

Estate agent Knight Frank estimated landlords received just a third of the £2.5 billion rents due at the end of March after emergency laws were passed to stop tenants being evicted from their premises before the end of June. 

West London firm Atlas Property Letting & Services said in a letter to tenants that it would instruct solicitors to issue a winding-up petition unless they paid March rents by last Friday. 

The letter added that the landlords had shown 'great flexibility', but if payment was not made the property owner risked breaching the terms of its own bank loans. 

Property owner Criterion Capital, which owns the Trocadero Centre in London's West End, also threatened to take its tenants to court. 

Its sister property firm, Golfrate, said companies would have to hand over extra fees to split the cost of upfront quarterly payments into less onerous monthly bills. It said a fee of 5 per cent of annual rents would cover 'increased workload and admin'. 

Kate Nicholls, chief executive of UKHospitality, the trade body for restaurants and bars, said: 'We have seen the first statutory demands served on premises within the sector and cases will now proceed to court with bank accounts frozen and insolvency triggered unless debt is paid.' 

The battle intensified as last week progressed, with high-profile names such as bookmaker Ladbrokes Coral withholding rents for more than 3,000 betting shops. 

Restaurateur Des Gunewardena said the 38 UK restaurants in his D&D London group – including Quaglino's – cost £2 million per month to run during lockdown and said the Government 'needs to step in to compensate tenants to pay their rents or bail out landlords and instruct them to not charge rents during the lockdown'. 

He added: 'At worst, it will become a dogfight that will inevitably result in many restaurants, retailers and some landlords too going bust.' 

Last week, Nicholls wrote to the Government asking for further protection for tenants from landlords' 'hostile tactics' as well as greater access to the Government's Covid loan schemes. 

A spokesman for Intu, which is fighting for survival, said: 'We have neither the desire nor the financial capacity to bankroll global, well-capitalised brands who have just decided they don't want to pay their rent.' 

Canary Wharf Group said it was supporting its tenants case by case, including offering non-repayable rent holidays and allowing service charges to be paid in arrears.

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