TheRevelers and publicists may not be the only ones who have sabotaged recent restrictions aimed at stopping the spread of the Coronavirus. Returning to work from home and requests to close bars and restaurants by 10 p.m. will not help refilling the lockers of landlords who are set to miss out on £ 4.5 billion in rent between mid-March and the end of the year.
The restrictions imposed this week represent a step back in the economic recovery and will adversely affect business in most sectors. While we feel the restrictions are somewhat minor, we believe they will reduce the amount of rent we can collect, ”says Mark Jarrett, head of property management at Colliers International.
Since the government has yet to define how commercial landlords and tenants should share the pain of lost income while social and shopping activities are curtailed, the two sides still struggle, store after store.
On Tuesday, we’ll look at how the fight progresses in the “Day Quarter” on September 29, when store and restaurant owners typically collect one of four parts of the annual rent.
While many retailers and hospitality companies have now switched to monthly payments in order to manage cash flow, the quarterly period provides a key moment for evaluation.
Two months after the rent day in June, landlords had raised nearly 70% of the money owed, up just over 18% on the due date, according to analysts at real estate software company Re-Leased. The numbers relate to expected rents at the start of the quarter, and thus do not reflect the significant reductions agreed upon by many retailers.
Rental distances for this month are expected to follow this pattern. Shops may reopen in June after a nearly three-month closure, but the slow return to Main Street has kept the economic pain lingering.
The pandemic appears to have accelerated the shift to online shopping, and has made many think twice about spending on non-essentials as potential job losses and wage cuts loom. Cash-strapped retailers are taking advantage of a temporary ban on non-payment of rent evictions – now extended through the end of December – to preserve cash.
Since March 16, more than half of retail rents and less than 70% of entertainment rents have undergone some form of renegotiation, according to consultancy Remit.
Powerful groups like Next and JD Sports used their muscles to agree on far fewer deals as the leases expired. More hit retailers, such as New Look, have resorted to bankruptcy procedures to obtain rental licenses or change leases based on turnover.
Tom Wallace, CEO of Re-Leased, said: “All eyes are now on September 29 and what the next quarter will achieve. With the announcement of the new restrictions on September 22nd and the extension of the rental moratorium the previous week, there is a strong suggestion that the improvement in rent collection may not bear fruit.
He added that the income shortfall for landlords should not be underestimated. “This is a huge level of debt, running into the billions, which is putting great pressure on landlords.”
As the months of bad trade continued, the system began to creak. Even the Queen’s finances are under pressure: Crown has only collected around 52% of the rent due from retail tenants. last week, ShaftesburyA large landlord in central London said the big business had paid less than half the rent due since March.
Melanie Leach of the British Land Association, which represents thousands of landlords, says mounting debt is now “a mountain too high for businesses and landlords to climb on their own.”
She argues that when companies simply cannot pay off this debt, the government should provide support through a “redemption grant” that covers half the rent, while landlords and tenants agree on how to cover the other half.
Details of the latest quarterly rent may increase pressure on the government to act.