NEWS RELEASE:
Remit Consulting’s ongoing survey of major Property Management firms reveals:
Managing agents report only a marginal increase in collection rates after 21 days of the Quarter
More commercial tenants reported to be agreeing monthly payment plans
June Quarter Day expected to be a major challenge as Covid-19 impacts UK property markets
Ongoing research by Remit Consulting into the collection of rent and service charge by the UK’s major property managers during the second quarter of the year has confirmed only a marginal increase in the amounts collected within 21 days.
The management consultancy has been surveying members of its Property Managers Forum since the beginning of April and has collected data from six of the UK’s largest property management firms concerning nearly 78,700 separate leases on over 18,350 commercial and residential properties across the UK. The study initially revealed that only 48% of rents were collected on the Quarter Day due date, rising to 57% after seven days. The updated research shows that by the end of the 21-day period this figure had risen to 67%.
Senior Consultant at Remit Consulting, Steph Yates, said: “Despite the hard work by property managers, there was only a marginal uplift in the rent and service charges being paid by tenants after 21 days.
“While there is anecdotal evidence of an increase in the number of commercial occupiers moving to monthly payment plans, which indicates a change in behaviour, we are not seeing any major uplift in collection rates. This is concerning and property managers and landlords are already worrying about the June Quarter day, particularly as the quarterly payments were due only a few working days after the lockdown was put in place by the government.
“By June there will have been at least seven weeks where many business occupiers will have been economically inactive and cash-flow will have been severely impacted and reserves will have, undoubtedly, dwindled.
“Initial enquiries about rent holidays and concessions show that there is no clear picture yet. Tenant requests continue to come in, and each situation is largely being decided on a case-by-case basis. However, while there are far more requests that would have been seen in any previous year, it does not yet seem to be as widespread as was initially feared by some in the industry.”
The latest figures from Remit Consulting shed further light on the plight of the retail sector and reveal that, three weeks into the Quarter, just over half (54%) of the rent due from retail operators has been collected.
The picture in the residential sector is a little better, with property managers reporting that 68% of this quarter’s rent payments were collected within 21 days (up from 47% after seven days).
The REMark study also reveals that the payment of service charges due by tenants also remains very low as a result of the ongoing Covid-19 crisis, with an overall average, for both commercial and residential property, of 56% after 21 days (compared to 48% after seven-days). In the retail sector, the figure rose to 45% over the first 21 days of the Quarter.
“We are aware that some managing agents struggle with the different priorities when demanding income: while collecting service charges will help the agents to manage the buildings over the coming quarter; landlords are more interested in collecting the rent which may be required to fund the service charge shortfall in due course. Our figures show that, as with previous years, the effort and reward are focused more on rental income,” concludes Steph Yates.