The shortfall in rent that should have been paid by occupiers of commercial property in the UK during the pandemic is projected to reach over £7.4 billion by the end of the current financial quarter, according to the latest research from Remit Consulting.
Despite improved levels of payments by tenants, many business occupiers are still in arrears with their rent and landlords, and projections for the current accounting period made by Remit Consulting as part of its ongoing study into the volume of rent and service charge payments since March 2020, suggests that investors can expect a total shortfall in rent for the September Quarter of around £435 million. This means that by the December Quarter Day (25.12.2021) the total shortfall in rents since the first Covid-19 lockdown is likely to have reached over £7.4 billion since the start of the pandemic.
Laura Andrews of Remit Consulting said, “Each quarter since March 2020 commercial property investors, which include many pension funds and other institutions, have seen a shortfall in the rent payments. While the figures have improved steadily during the pandemic, we are still expecting a shortfall at the end of the quarter, across all asset classes, of around 6% compared to pre-pandemic levels. This is bad news for investors, and for anybody whose pensions and savings are invested in real estate.
“While the emergence of the Omicron variant of Covid-19 may not have a great impact on the figures for the last three months, the increased restrictions, particularly in the retail and leisure sectors, may affect the amount of rent collected when the December Quarter invoices are issued by landlords and property managers.
“With the Government’s moratorium on eviction of business occupiers for non-payment of rent is due to end in March, and the introduction of the Commercial Rent (Coronavirus) Bill, the situation regarding outstanding payments should be clarified over the coming months. It will not, however, be a fast process, and we can expect that it will take years to resolve,” she added.
During the Covid-19 pandemic, Remit Consulting has worked in conjunction with the British Property Federation (BPF), the RICS, Revo, the Agent's Advisory Group, and other members of the Property Industry Alliance (PIA), analysing the collection of rent and service charge payments by the country's largest property management firms.