NEWS RELEASE:
Remit Consulting’s ongoing survey of major Property Management firms reveals:
An overall average of 30% of rents and 39% of service charge payments due on March Quarter Day remain outstanding after 28 days
Property managers report that “some tenants can’t pay, others won’t pay”
Remit Consulting’s weekly report into the collection rates of rents by major property management firms reveals that, on average, 30% of rents and 39% of service charges that were due for payment on March quarter day remain outstanding after 28 days. Concerns are growing among property investors and institutions regarding the willingness and ability of some residential and commercial property occupiers to pay due to the ongoing lockdown in the UK.
“The difference between the level of rent and service charge collection at the start of the quarter and 28 days later highlights how hard everyone has been working to secure payments. The overall average for rent collection has risen from 48% on the due date to 70% after 28-days. However, in the last week we have seen only a minimal uplift in the collection rates and there are fears that the ability, or willingness, of some tenants to pay what they owe has levelled off,” said Steph Yates, senior consultant at Remit Consulting.
“The emergency Coronavirus Bill, announced by the UK government just before the Quarter Day, contained provisions that protected commercial tenants from eviction if they were unable to pay their rent because of coronavirus. This was then followed by a temporary ban on the use of statutory demands and winding up petitions until the end of June.
“While many tenants, who are struggling financially, are reportedly agreeing payment plans and deferring payments with their landlords, there are concerns from property and asset managers that other tenants appear to be burying their heads in the sand or deliberately avoiding paying their bills.
“A situation seems to be evolving where there are some tenants who genuinely can’t pay while others are simply choosing not to pay. The property managers involved in the survey, and the institutional investors they represent, are expressing their concerns to us on a daily basis regarding the situation and fear that some tenants see the legislation as an excuse to simply to withhold payment of their rent. Their focus is already beginning to shift to the June quarter day as this will coincide almost exactly with the end of the government’s 90-day moratorium,” she added.
Remit Consulting has been surveying members of its Property Managers Forum since the beginning of the quarter, analysing the collection of rent and service charge concerning nearly 78,700 separate leases on over 18,350 commercial and residential properties nationwide.
The figures for all sectors are shown below.
While the Remit Consulting report seem to indicate a levelling off of collection rates, this may alter over the next week as many tenants with monthly terms will be due to make payments at the end of April/beginning of May.
“It might be that payments have plateaued for this quarter,” said Yates, adding: “Next week’s figures will shed more light on the situation.”
To view an infographic covering a summary of our research to date, click here.