Commercial landlords face £3bn shortfall
Commercial property landlords face potential lost income of more than £3bn by September as tenants continue to withhold rent during the coronavirus pandemic.
Data from Remit Consulting shows that, 35 days after the collection date, commercial landlords have collected just 63.3pc of the rent owed for the third quarter and 73.5pc for the second quarter.
Retail landlords are faring the worst, having collected just 50.5pc and 57.2pc respectively over those periods. Tenants were forced to shut for months and, for many, footfall has yet to pick up despite their being allowed to re-open.
Steph Yates, senior consultant at Remit Consulting, said: “We calculated that the loss to pension funds, real estate investment trusts, and other institutional investors at the end of the previous quarter stood at £1.5bn.
"The trajectory of the current quarter gives no suggestion that investors will fare any better this time around.”
The challenge facing commercial landlords has been laid bare by the fate of shopping centre owner Intu, which went bust in June, and rival Hammerson, which is tapping shareholders for £552m and selling off key assets.
The government has intervened to protect tenants by temporarily banning evictions and winding up petitions, but many landlords argue it has encouraged some healthy tenants to withhold rent even though they can afford to pay.
Ms Yates added: “It was hoped, with anecdotal evidence of landlords and tenants agreeing monthly payment plans, that there might have been a noticeable increase in rent payments.
"This should have been evident in the figures for collection at 35 days, but there is no sign of this.
"With the moratorium on forfeiture for non-payment of rent by tenants of commercial property still in place, there still appears to be a divide between those trying to pay what they owe and those choosing not to.”
