A recent article published by the RICS regarding the challenges of rent collection in the UK during the COVID-19 pandemic and the varying picture across regions and asset types featured the thoughts on the situation from Remit Consulting’s Steph Yates.
Steph is acknowledged as the industry expert on the topic as, over the last nine years, she has conducted the firm’s regular REMark Study which has researched rent and service charge collection along with other trends and issues within the UK's property management sector.
Since March quarter day, Steph has been working in conjunction with the British Property Federation (BPF), the RICS, Revo, the Agents Advisory Group and other members of the Property Industry Alliance (PIA), recording the amount of rent and service charge collected by managing agents and self-managed funds. The research is based on the reconciled figures for rent and service charge payments recorded as part of the reporting processes to pension funds, REITS and other institutional investors and covers around 125,000 leases on 31,500 prime commercial property investments nationwide.
The following is an extract from the RICS article
“Since the start of lockdown Remit Consulting has worked alongside the RICS, BPF, and other industry leaders, to build on REMark, its rent and service charge collection survey that’s been running since 2010 – what observations have they drawn from their data during this period?
“The data comes from 125,000 leases on 31,500 prime commercial property investments across the country and is based on consolidated figures from the largest managing agents, REITs and funds.
“Our data showed that, following the government’s moratorium on re-entry or forfeiture of commercial leases for non-payment of rent, the rate of collection plateaued, with many tenants apparently choosing not to pay despite the introduction of the government’s Code of practice for the commercial property sector.
“The research allowed RICS and other partners to keep the government informed about the crisis in the property sector, with up-to-date, accurate and verified information.
“The latest data reveals that while the trajectory of the collection rates for the June Quarter is mirroring that witnessed during the March Quarter, initial collection levels have fallen and the shortfall this time looks likely to be even bigger than in March.
“Using market size numbers from the IPF, we calculated that the shortfall for March equated to £1.5bn of lost rent across the whole property investment market, so a £3bn shortfall over the two quarters is quite plausible. This prospect is a big concern for pension funds and insurance companies, as a fall in their income will inevitably hit the wider population, many of who have finances that rely on these institutions.
“In 2019, Remit Consulting’s RICS insight paper The use and value of commercial property data highlighted that the industry was already at a tipping point with regard to the exponential growth of real estate data. The pandemic has brought data analysis into sharp focus and confirms our industry’s need to develop data standards that are open-sourced and applicable globally.”
Steph Yates, Remit Consulting