High street landlords have seen a 22% increase in the amount of rent collections for the March quarter compared with the previous period. The latest research from Remit Consulting’s REMark Report shows that 68% of rent due from high street shops had been paid 35 days after it was due.
The data for the high street highlights that the March quarter had the highest level of rent collection since the beginning of the Covid-19 pandemic. This brings some hope for commercial landlords who have struggled over the past year, with government restrictions limiting the collection of rent arrears.
Hospitality sector remains hardest hit
However, the hospitality and leisure industry saw a 15% fall in the amount of rent collected compared to the December 2020 quarter. By day 35, landlords had received 44% of all rent. This sector has been hit harder by the lockdown restrictions, with many businesses not able to open fully until the middle of June at the earliest.
The rent collection rates for hotels were particularly low, with just 31% of rent received 35 days after the March due date. At the same point for the December 2020 quarter this figure was 46%.
Steph Yates from Remit Consulting commented: “The figures for high street retail have been higher than in previous quarters, but the latest figures suggest that this is a sustained improvement with over 21% more rent being collected in the current quarter compared with three months ago, which is good news. This probably reflects that the majority of retailers have now reopened. However, the leisure sector, which cannot fully reopen yet, continues to struggle.
“Whilst the situation on the High Street seems to be improving, we should not forget that it comes from a very low base and that, 35 days after rents were due to be paid, just 63.3% of all retail rents have been collected.”
The office market saw the highest level of rent collection, with just over 90% received by landlords after 35 days. This was followed by the industrial sector (87%) and mixed portfolio properties (74%), before the retail and leisure sectors.
Across the commercial property market, almost 72% of rent had been collected 35 days after the March due date. This is a similar level to the previous two quarters. Service charge collection rates were also at a comparable amount across the sectors.
Covid-19 impact on rent collections
Since the start of the pandemic, commercial property landlords have seen over a £5 billion shortfall in the amount of rent they have received. According to the figures from Remit Consulting, this equates to £1 in every £6 of rent due remaining unpaid. There is still a number of tenants who are choosing not to pay their landlords the rent and service charges they owe.
Until the end of June, government restrictions prevent the use of the lease forfeiture process for commercial tenants in rent arrears. There are also limitations on the use of the Commercial Rent Arrears Recovery (CRAR) system that are in place until the same date. Before 23rd June, commercial tenants need to owe at least 457 days rent before a notice of enforcement can be issued or goods are taken into control. Between 24th and 30th June, this figure increases to 554 days of outstanding rent.
More information:
Covid-19 Commercial Property Rent Collection Update
Recovering commercial rent arrears during coronavirus
Commercial property eviction ban extended for a further three months