Astor Hyde Park, a backpacker hostel in London’s Kensington that offers dormitory-style accommodation for less than £20 a night, has had rent arrears built up during the Covid lockdown slashed following an arbitration.
The hostel took its case to Falcon Chambers Arbitration, an independent arbitration panel empowered by the government to reduce or uphold commercial rent arrears generated during the Covid-19 pandemic.
The landlord is the Royal Commission for the Exhibition of 1851, an organisation set up in 1850 to organise the Great Exhibition of 1851. It is now a charity and owns an estate in South Kensington that includes the Natural History, Science and V&A museums; Imperial College London; the Royal Colleges of Art and Music; and the Royal Albert Hall. It also owns 191 Queen’s Gate, the hostel’s location.
According to the arbitration decision, written by arbitrator Elizabeth Fitzgerald, although the hostel never closed its doors to people already staying, for much of the pandemic it was unable to accept new arrivals.
In April 2020 it only had 10 paying guests. Business picked up in the summer of 2020 and occupancy rates reached 25-30%. Bookings increased significantly for the 2021 Christmas and New Year period. However, the Omicron variant led to more than 1,000 cancellations and the hostel was back to having just a few residents.
According to the decision, revenue for the year ended March 2020 was almost £1m. A year later it had dropped by almost 90% to £118,000 leading to a loss before tax of more than £300,000. The rent debt over the protected period amounted to close to £200,000.
The landlord and tenant negotiated possible solutions but could not reach agreement. Lawyers for the hostel made a final proposal that the debt be reduced by 80% and the balance paid off over two years.
Lawyers for the landlord made a final proposal that the debt be reduced by £50,000; that interest is written off; and that the balance be paid over two years.
In her ruling, the arbitrator said both proposals were consistent with the principles of the arbitration procedure.
“As such, I must decide which is the most consistent proposal,” she said.
She found in favour of the hostel. The decision writes off £157,000 and divides the £39,000 balance into eight quarterly instalments.
So far, the panel has made 12 decisions. In the majority of cases it has upheld rent arrears but given tenants extra time to pay.
To send feedback, e-mail newsdesk@eg.co.uk or tweet @EGPropertyNews
