Real Estate

UK retailers pay just 13% of latest rent bill


Retailers have paid only a fraction of the rent they owe for the latest quarter, as UK high streets come under growing pressure in the face of tightening coronavirus restrictions.

Shop owners paid 13 per cent of their rent bill on Tuesday, when payment was due for the three months to the end of the year, according to Re-Leased, a commercial property management platform. That marks a steeper shortfall than on the previous payment date on June 24.

“If you’re a retailer, you are thinking: ‘am I going to have access to my shop in three months’ time?’ You might hold off [paying] a little bit, you might see what you can get from your landlord,” said Caleb Dunn, commercial analyst at Re-Leased. 

The prospect of stricter lockdown measures poses a particular threat to retail and hospitality businesses, which rely on bumper Christmas trade to see them through more fallow months. 

Kate Nicholls, chief executive of trade body UK Hospitality, said that the industry took around a third of its revenues in the last two months of the year.

“The risk is that the nascent recovery we’ve seen during the summer goes into reverse. That would be very unfortunate,” said Brian Bickell, chief executive of Shaftesbury, a major landlord in London’s West End.

Shaftesbury revealed on Friday that it has received just 41 per cent of rent owned for the period between March and the end of September. The company has not yet announced its rent take for the current period. 

Rent receipts from office and industrial tenants fared better, at 32 per cent and 18 per cent, according to Re-Leased’s analysis of 35,000 commercial leases. On June 24, they paid 23 per cent 16 per cent respectively. 

Most tenants are expected to stump up their rent, however. Just under three-quarters of the rent owed to UK landlords for the three months from June 24 has now been paid, according to Remit Consulting, a real estate consultancy, with retailers paying around two-thirds of what they owe.

But some tenants simply cannot or will not pay, leaving UK commercial property owners with a rent shortfall of more than £3bn since the pandemic started — a deficit that is likely to grow.

“All signals are pointing towards a total of £4.5bn in unpaid rents by the end of December, which is too high a mountain for businesses and property owners to climb on their own,” said Melanie Leech, chief executive of the British Property Federation, which represents property owners. 

The BPF has asked the government to extend grant support to struggling tenants and to cover rent in some cases.

The government’s decision to extend a ban on evicting commercial tenants until the end of December has provided businesses with additional breathing space, but frustrated landlords. 

“While for many [businesses], recovery is still at risk and more support will be vital, we continue to see well-capitalised businesses taking advantage of government interventions and refusing to pay rent,” said Ms Leech.

That has left some landlords in dire straits, and unable to meet their own covenants with lenders.

“For landlords, there is a bubbling up of frustration: some of those retailers — Boots or Superdrug for example — are still not being forthcoming and paying their fair share,” said Mr Dunn.

Greggs, the bakery chain, which has paid all of its rent to date, said that it was “watching the situation closely” as it did not want to “lose out” while competitors agreed discounted rates with landlords.

The situation was unlikely to improve before the end of the year, said Steph Yates, senior consultant at Remit Consulting. “The prospects are looking bleak and if the prime minister’s suggestion that the current restrictions could be in place for six months, it may well be much longer,” she added.



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