• Overall rent collection stands at 85.2%, compared to 78.6% 35 days past the due date in the previous quarter
• Collection rates suggest landlords will experience a further shortfall this quarter
Over 85% of rent owed by businesses at the beginning of the September Quarter were paid within 35 days of the due date, the highest level seen so far in the pandemic, according to the latest research from Remit Consulting.
The average figure of 85.2% is 6.6 percentage points higher than at the 35-day point of the previous three-month period and, except for the June 2021 quarter, the collection rates are already higher than the 90-day collection rates in any quarter since the start of the pandemic.
“Despite the improving levels of payments by tenants, many business occupiers are still in arrears with their rent and the current trajectory of rent collection rates suggest that investors can expect a further shortfall at the end of the quarter, adding to the £6.97 billion that, since March 2020, has been unpaid,” said Steph Yates of Remit Consulting.
“With the moratorium on evictions of tenants due to end next March, two years after the first national lockdown, tenants who are unable to repay arrears are being urged to reach agreement with their landlords. However, should negotiations fail the government has, through new legislation, established legally binding arbitration and has pledged protect business occupiers from bankruptcy petitions and CCJs.
“This is a situation that will not be resolved overnight, and the recovery of rent arrears could be a challenge for years to come, which is bad news, not just for landlords but also for those whose pensions and savings are invested in real estate,” she added.
The latest figures from Remit Consulting show that, at 81.7%, the collection of rent from leisure occupiers rent collection 35 days after the due date was substantially higher than the same point of the previous quarter (59.1%) and that for the first time since the start of the pandemic the leisure sector performed better than the retail market (81.4%).
The office market was, once again, the best performing sector which saw 92.2% of rents collected.
Since the start of the pandemic, Remit Consulting has been working in conjunction with the British Property Federation (BPF), the RICS, Revo, the Property Advisors Forum, 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. The research covers around 125,000 leases on 31,500 prime commercial property investment properties across the country.