We recently spoke about commercial rent arrears during COVID-19 as the government put measures in place to deal with the financial effects of coronavirus on UK business.
The latest figures show that every sector, from office and retail to warehouse and industrial are struggling to keep up with their commercial rent payments.
A report from Statista revealed that in March, five days after the quarter, Landsec had collected:
- 86% of its office rents
- 41% of its retail rents
- 23% of specialist rents
This compares with 91-98% at the same time in the 2019 March quarter.
Another report by Re-Leased paints a similar picture. Looking at over 10,000 properties and 35,000 leases, data suggest that suggests that after 12 days of the quarter they had collected:
- 62% of office rents (usually 68%)
- 50% of industrial rents (usually 75%)
- 48% of retail rents (usually 77%)
In warehousing and distribution, landlord SEGRO revealed it had only collected 71% of rents on the due date, compared with 96% at the equivalent stage in 2019.
It’s thought that figures for the June 2020 quarter will be even lower with a further 10% reduction in rent payments expected.
What’s going to happen to businesses that are in rent arrears?
Currently, the government has in place a three-month suspension on evictions of commercial tenants whilst lockdown measures remain in place. However, whilst this pause on evictions is beneficial to business owners in the short-term, tenants will still owe their landlords the rent they should otherwise have been paying during this time. This could leave many businesses in trouble and may even lead to insolvencies.
With that in mind, the government has announced that it plans to publish a code of practice to assist discussions between high street businesses and landlords over rental payments for the 2020 June quarter. It is thought that sensible and realistic schedules of rent arrears collections will be laid out to help both parties.
If your business is suffering from cash flow problems that could impact your ability to pay your commercial rent, we can help you. We offer free, no obligation advice on 0161 907 4044 or [email protected]