Remit Consulting’s research shows that rent collection from tenants of UK commercial properties reach the highest levels so far in the pandemic

⦁ Verified figures reveal that, overall, 72.1% of rents were collected with seven days of due date

⦁ Significant uplift in rent collection for retail properties and from pubs, bars and restaurants

The collection of commercial property rents in the UK, seven days after the September quarter due date, have reached the highest level achieved for any quarter during the pandemic so far, according to the latest research from Remit Consulting in its regular REMark Report.

The figures for collection of rent and service charges, which are verified by the country's major property management agents, reveal that overall, an average of 72.1% of rents due from tenants of commercial property, were collected within seven days of the due date. This compares to a figure of 66.5%, collected at the same point in the previous quarter.

According to Remit Consulting, both the retail and leisure sectors showed significant improvements compared to previous quarters of the pandemic. Overall, 68.8% of retail rents were collected seven days after the September quarter day, compared to 62.3% at the same stage of the June quarter. Similarly, 57.2% of rents for leisure properties were collected, compared to just 40.1% in the June quarter.

The improvements were reflected by the sub-sectors, with 67.1% of high street retail rents having been collected and 46.8% of rents for pubs, bars and restaurants.

Steph Yates of Remit Consulting said: "The first seven days of the current quarter saw a rapid increase in the collection of rents and service charge payments, which is good news for investors and landlords such as pension funds and other institutions, particularly as the upward trajectory of payments from tenants is similar to the previous quarters of the pandemic. However, this quarter, the collection rates are on average, around six percentage points higher than the previous quarter, which was, in turn, the best three-month period of the pandemic so far.

"While the signs are promising, overall collection rates for both rents and service charge payments are still significantly lower than recorded by the REMark Report over the ten years prior to Covid-19."

According to the firm’s research, since the start of the pandemic in March 2020, investors and property owners, which include many pension funds and other institutions, have seen a shortfall in the rent they have received from commercial occupiers of almost £7 billion.

Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms since March 2020, 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). The research covers around 125,000 leases on 31,500 prime commercial property investment properties across the country.

Collection of rent on commercial properties improved during the June Quarter, but pandemic shortfall continues to grow

• Investors face a shortfall in rental income of over £707,000,000 from the previous quarter

• Total shortfall over the pandemic reaches over £6.97 billion

• September Quarter Day collection figures higher than compared to the previous reporting period

Investors in the UK's commercial property sector experienced a shortfall in rent collected of £707,265,000 in the three months of the June Quarter, according to the REMark Report, the latest research published by Remit Consulting.

Based on verified financial reports from national firms of property managers responsible for 125,000 leases on over 31,000 prime commercial property investment properties across the country, Remit Consulting has analysed rent and service charge payments for the three months between the June and September quarter days.

"The data shows that, over the 90 days of the June Quarter, 88.8% of the rent due to be paid by tenants of commercial properties to their landlords had been collected. By comparison, at the end of the March Quarter 2021, an average of 80.7% of all rents had been received from business tenants," said Steph Yates, a senior consultant at Remit Consulting.

"While this improvement is most welcome, the total shortfall in rental income since the beginning of the pandemic has reached almost £7 billion. There is great uncertainty regarding how much of this may ever be recovered, and the consequences for pensions, savings and investment.

"Despite the improved collection rates over the previous three months, the verified figures for collection rates at the start of the September Quarter suggest that we are not yet out of the woods, with an average of just 57.4% of the rent payable, across all sectors, having been collected on the due date. While this figure is better than witnessed in the previous quarters of the pandemic, it is still significantly lower than experienced prior to the first national lockdown in March 2020," she added.

While the collection of rent from retail and leisure operators were, once again, the lowest of all the sectors recorded by the REMark Report, the study also confirms a marked improvement compared to the previous quarter. The collection of retail rents was 9% higher on the September Quarter day compared to three months earlier while the payment of rent, on the due day, by leisure occupiers was 10% higher than on June Quarter Day.

The collection of rent from both the office and industrial sectors were also higher than seen in June.

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), Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms since the start of lockdown.

The Amazon Effect

Amazon – the company we love to love and love to hate - has received more than its share of brickbats over the years ranging from the environmental impact over its over-generous packaging to adverse comments about avoiding tax. It seems that Amazon is not the standard bearer we would hope for in ESG (Environmental, Social and Governance) matters.

But wait; there has been positive press recently since it announced plans to create 10,000 jobs in the UK this year, and will pay London based operations staff a minimum of £10.80 per hour (£1.89 more than the national living wage for over 23s). What’s more, across the pond, Amazon’s introduction of higher wages in 2018 forced the hand of competitors, such as Levis, to also offer higher wages to workers which changed the landscape of local economies, in what has been coined the ‘Amazon effect’.  This must be good news for, er, social impact on the community.

This ‘Amazon effect’ also shows the wide-reaching social impact that can be achieved through corporate policy and action.

ESG is multifaceted and pursuing and succeeding in all elements at the same time is all but impossible given the wide range of possible impacts a large company can have on its community. Where does one start with so many possible bear traps?

In real estate, there is not only a focus on reducing carbon emissions in the construction and operation of buildings, but also the social impact on local communities that is possible through innovation, technology and the informed use of data.

The increasing demand from investors for ESG performance data they can trust in order to make informed investments, coupled with the increasing regulations (such as SFDR), is promoting transparency around ESG throughout the industry. A cohesive ESG strategy focussing on increased transparency and prioritising ESG policies can not only add value and create additional returns for commercial real estate investors, but at the same time demonstrate the impact that individual companies are having on local communities.  

We can’t guarantee that a focus on ESG strategy will keep you out of the papers but hopefully the press coverage will be for the positive impact you are having on the communities affected by your portfolio.

IMPROVEMENT IN PAYMENT OF COMMERCIAL PROPERTY RENTS CONTINUES

22nd July 2021

73.9% of the rents due from commercial tenants received within 21 days of the June Quarter day

Good news from the High Street as 69.6% of retail property rents were paid within 21 days of the due date

The collection of rent from commercial property tenants has, 21 days after the June quarter due date, continued to reach the highest level achieved at the same point of any financial quarter of the pandemic so far, according to the latest figures published by Remit Consulting.

The figures released from the firm’s REMark Report, which are verified by the country's major managing agents show that overall, an average of 73.9% of the rents due from commercial tenants were paid within 21 days of the due date. This compares to 67.3% collected at the same point in the previous quarter and 59.2% recorded 12 months previously.

The sector that experienced the largest increase in rent collection compared to the March Quarter 2021, was the retail sector, where rent collection reached 69.6% compared to 57.8% at the same point three months ago. By comparison, 21 days after the June quarter day in 2020, just 47.7% of retail rents had been collected.

The leisure sector has also seen a marked improvement in the current quarter, and after 21 days, 49.5% of rents have been collected. In the March quarter, the equivalent figure stood at 38.4%.

Steph Yates, a senior consultant at Remit Consulting, said: "This is clearly good news, and it would appear that we are on course for the highest total of quarterly payments recorded so far during the pandemic. The improvement seen by the retail and leisure sectors will be particularly welcomed by investors and is a reflection of the relaxation of many of the Covid-19 restrictions over recent weeks. Indeed the latest news reflects this sentiment, with some landlords announcing that demand for rent concessions has dropped and that they aren’t expecting to be granting any more concessions over the course of the next quarter.

“However, it is clear that a significant number of tenants are still unable, or unwilling to make the payments that they owe and while the Government’s moratorium on evictions of business tenants for non-payment of rent continues, we expect that the shortfall in income experienced by investors will increase further.”

Remit Consulting calculates that, since the start of the pandemic in March 2020, investors and property owners, including many pension funds and other institutions, have experienced a shortfall in the rent they have received from commercial occupiers of £6.4 billion, equating to approximately £1 in every £6 of rent due going unpaid.

The latest REMark Report also reveals that the payment of Service Charges by tenants increased marginally and, overall, 66.8% was paid by businesses within 21 days of the due date. This compares to 64.7% received 21 days after the March Quarter day.

During the pandemic, Remit Consulting has worked 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.

Remit Consulting reveals a shortfall of £6.4 billion in rent income for investors since start of the pandemic, as just half of commercial property rents were collected on June Quarter Day

Non-payment by a hard-core of tenants reflects the pattern of the previous three Quarters

20% shortfall in rents due from business tenants over previous three months

There was another 20% shortfall in the payment of rents by business tenants during the March Quarter 2021, and just half of all rents due on the June Quarter Day were paid to owners of commercial property in the UK, according to the latest figures published by Remit Consulting.

The management consultant’s REMark Report shows that the overall average for rent collected on the June 24th due date stood at 49.1% and that, at the end of the March Quarter 2021, an average of 80.7% of all rents had been received from business tenants.

Steph Yates of Remit Consulting said, “The reconciled figures for the June Quarter Day show that, across all sectors, just shy of half of rents were paid on time. This figure is broadly in line with the amount collected at the start of the previous three Quarters, and compares favourably with the figure from 12 months ago when just 37.8% of rents were collected.

“Once again, over the previous financial quarter, there was another substantial shortfall in what was due to be paid by tenants, meaning that pension funds, institutions and other investors will have taken another hit in their incomes.”

“What we are seeing are very similar collection figures to previous Quarter Days, and this seems to be the pattern that the property managers and their clients will have to deal with for the foreseeable future. While it is too early to predict, if this Quarter follows the trajectory of the last 15 months, investors can expect further significant shortfalls by the autumn.”

According to Remit Consulting, since the start of the pandemic in March 2020, investors and property owners, which include many pension funds and other institutions have seen a shortfall in the rent they have received from commercial occupiers of £6.4 billion, equating to approximately £1 in every £6 of rent due going unpaid.

Remit’s figures for the June Quarter Day, which are verified by the managing agents, show that more than half (50.8%) of rents were collected on time from the retail sector and that 61.7% of office rents and 60.1% of industrial rents were collected. Just 24.1% of rents were collected from the leisure sector on the due date.

“While the government’s recent announcement that the moratorium on evictions is being extended until next March has not made things worse, it has not got any better and there still appears to be a hard-core of tenants choosing not to pay their bills. Landlords are continuing to accrue mounting losses,” said Steph Yates

“As one property manager put it, ‘the government have kicked the can further down the road than a Jordan Pickford goal kick!’” she added.

The data on the collection of service charges were broadly similar and, with an overall average of 43.0%, are very similar to the figure for the March Quarter (44.5%).

During the pandemic, Remit Consulting has worked 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.

Rent collection rates

Due date rent collection comparisons - Mar-20 to Jun-21

Service Charge collection rates

Remit Consulting's research shows hopeful signs on the High Street.

Collection of High Street Retail rents approach 70% after 35-days of the March Quarter

There is finally a sign of good news from the beleaguered High Street, according to the latest research from Remit Consulting regarding the collection of rent from commercial property occupiers.

Remit Consulting’s REMark Report into the amount of rent and service charges collected 35 days after they were due on the March Quarter Day reveals that 67.7% of rents due from high street shops had been received by landlords and property managers. This figure is 21.8% higher than in the previous quarter and 18.7% higher than in the September quarter last year. The figure is the highest seen at this stage of a quarter during the pandemic.

The overall figure for all sectors showed that 71.8% of rents were collected 35 days after the due date. This is almost identical to the figure for both the December and September quarters.

While there has been an improvement for high street retail, the collection rates of rent for leisure properties (hotels, pubs, bars and restaurants) was around 15% lower than in December. The collection rates for the hotel sector were particularly poor, with only 31.2% of rents collected 35 days after the due date. This compares to a figure of 45.9% for the December quarter day +35 day figure.

Steph Yates of Remit Consulting said, "The figures for High Street retail have been higher than in previous quarters, but the latest figures suggest that this is a sustained improvement with over 21% more rent being collected in the current quarter compared to three months ago, which is good news. This probably reflects that the majority of retailers have now reopened. However, the leisure sector, which cannot fully reopen yet, continues to struggle.”

“Whilst the situation on the High Street seems to be improving, we should not forget that it comes from a very low base and that, 35 days after rents were due to be paid, just 63.3% of all retail rents have been collected,” she added.

Since March 2020, investors and property owners, which include many pension funds and other institutions, have seen a shortfall in the rent they have received from commercial occupiers of over £5 billion which, according to Remit Consulting, equates to £1 in every £6 of rent due going unpaid. The firm’s research indicates that there is still a hard-core of tenants who are choosing not to pay the rent and service charges that they owe.

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.

Rent collection by Quarter

High Street Retail rent collection (December 2020 and March 2021)

Rent collection rates

Service Charge collection rates

Remit Consulting’s research raises concerns of a further significant loss to commercial property landlords due to shortfall in rent payments

Despite the recent easing of Covid-19 restrictions, the UK’s commercial property market appears to be heading for a further significant shortfall in rent collection over the current fiscal quarter, according to the most recent study of rent and service collection rates published by Remit Consulting.

The firm’s REMark Report figures for the percentages of rent and service charge payments reveal that overall, 21 days after March Quarter Day (25th March) due date, 67.3% of the rent and 64.7% of service charge payments were collected by landlords of commercial properties and property managers.

“These figures are almost identical to those seen 12-months ago, at the start of the first national Lockdown, and those for the September and December quarters,” said Laura Andrews of Remit Consulting.

“If the collection rates continue on the same trajectory, then the market is on course for a further substantial shortfall in income this quarter and the figures remain about 30% below those experienced in the equivalent, pre-Covid, Quarter of 2019 and the scale of any shortfall at the end of the current three month period is important as it coincides with the end of the Government’s moratorium on evictions for non-payment of rent,” she added.

Remit Consulting’s research indicates that there is still a hard-core of tenants who are choosing not to pay the rent and service charges that they owe. Over the past 12-months Investors and property owners, which include many pension funds and other institutions, have seen a shortfall of over £5 billion which, according to Remit Consulting, equates to £1 in every £6 of rent due going unpaid.

“The property management firms who are part of this study indicate that the majority of businesses that genuinely cannot pay their rent and service charges because of Covid-19 have already reached some form of a compromise deal with their landlords. We are concerned that there remains a hard-core of occupiers who are choosing not to pay and that they are responsible for much of the shortfall in landlords’ incomes at the end of each quarter,” said Laura Andrews

The REMark figures do provide some hopeful news in that the collection of rent due on High Street retail properties were 21.0% higher than at the equivalent period of the December Quarter.

Laura Andrews added: “While there is a glimmer of hope on the High Street, we have to remember that this improvement comes from a very low starting point and that, three weeks after they were due to be paid, just 57.8% of all retail rents have been received. Over the same period, the collection rates for leisure properties, such as pubs, restaurants and hotels fell slightly in comparison to the previous quarter.”

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.

Rent collection by Quarter

Rent collection rates

Service Charge collection rates

REMark Report shows that payment of rent and service charges for commercial property recovers some lost ground

The collection rates of rent and service charge payments on commercial property improved over the first seven days following the March Quarter due date, according to the latest research from Remit Consulting.

“Although the amount of rent and service charges collected on the due date was one of the lowest figures for a Quarter Day over the past year, we recorded a small recovery in the rate of payments over the first week of the Quarter and reached very similar levels to those experienced previously during the pandemic,” said Steph Yates, senior consultant at Remit Consulting.

“While, on the face of it, this is good news and the trajectory of collection rates appears to be in line with those experienced over the past year, we should not forget that this ‘new normal’ is still around 30% lower than in a typical, pre-Covid, Quarter and that investors and property owners have seen a shortfall of over £5 billion since the start of the lockdown restrictions in March 2020. This equates to £1 in every £6 of rent due going unpaid,” she added.

Laura Andrews of Remit Consulting added: “With the recent relaxation of some of the Government’s Covid-19 restrictions it is hoped that the collection rates may improve further, particularly for retail and leisure occupiers, and the next few weeks will provide a clearer picture as to the scale of any shortfall at the end of June when the Government’s moratorium on evictions for non-payment of rent is due to be lifted.

“The longer that the moratorium is kept in place, the greater the damage being inflicted on pension funds and other institutional investors will become clear and our research shows that there is still a hard-core of tenants who are either unable to pay or are choosing not to pay.”

Remit has also noticed an overall change in behaviour – the spread of rental payments over the quarter may suggest a long-term movement to monthly payments.

“Over the past twelve months, many tenants and landlords have agreed on concessions and revised payment plans. Such agreements have seen an increase in the number of business occupiers paying rent monthly, and it remains to be seen if this will become a common feature of leases on commercial property in the future,” Laura 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.

Rent collection rates

Service Charge collection rates

Financial institutions face further shortfalls in rental income from commercial property portfolios

• Rental income shortfall from business occupiers reached £5.34 billion over the first 12-months of the pandemic

• March Quarter Day collection figures worst since June 2020

Pension funds, insurers, institutions and other investors in the property sector experienced a shortfall of £5,343,435,000 in rent collected on commercial properties over the first twelve months of the pandemic, according to the latest research published by Remit Consulting.

Based on verified financial reports from national firms of property managers responsible for 125,000 leases on over 31,000 prime commercial property investment properties across the country, Remit Consulting analysed rent and service charge payments for the three months between Christmas and the March Quarter day.

“Over the 90 days of the December Quarter, the shortfall experienced by investors, many of which are pension funds, insurers and other institutions totalled over £1.1 billion with 78.6% of the rents due collected overall,” said Steph Yates, a senior consultant at Remit Consulting.

“While this figure is generally in line with the previous three quarters of the pandemic, there were some concerning trends within the different sectors that we study with the rent collected on leisure properties (restaurants, pubs, etc.) falling by nearly 6% compared to the previous quarter. The same comparison for retail properties saw a fall of nearly 3%.

"The initial analysis of the data on rent collection for the March Quarter Day indicates that property managers are seeing further falls in the levels of rent paid across the board. Overall, less than half of the rent payments due on March Quarter Day were received by property managers and reveal the poorest start to a financial quarter since June last year, which were the lowest collection rates of the pandemic so far," said Laura Andrews of Remit Consulting.

"After 12 months of lockdowns and restrictions, it is possible that the ongoing uncertainty regarding the route out of the pandemic, combined with a further extension of the Government's moratorium on evicting tenants due to non-payment of rent because of Covid-19, is causing further issues with rent payments from business occupiers,” she added.

Steph Yates confirmed the concerns of property managers and many institutional asset managers regarding the uncertainty surrounding many tenants’ ability to pay their debts.

“The extension of the moratorium at the beginning of March will have pleased the hard-core of business occupiers that are choosing not to pay rent. It may also have caused other tenants to withhold their rent. While they remain in occupation without paying rent, landlords are faced with stranded assets, not knowing if the tenant is viable or not. Paraphrasing the Nobel Prize-winning physicist, we are describing them as ‘Schrödinger’s tenants’ - occupiers that are simultaneously both alive and dead,” she said.

Remit Consulting also reports the growing expectation within the property sector that, when the moratorium is lifted, the market might see an increase in the use of Company Voluntary Arrangements (CVAs) as an escape route for businesses struggling to pay their rent.

Government statistics, provided by The Insolvency Service, show that during 2020 insolvencies in the UK, including CVAs, was at their lowest since 2010. Additionally, the number of CVAs in February was just a third of those witnessed twelve months earlier.

Working 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), Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms since the start of lockdown.

The moratorium, shortfalls in rent collection and the rise of Schrödinger's tenant.

While it was expected that the Chancellor of the Exchequer would use his budget speech to announce an extension to the government's moratorium on the eviction of commercial tenants due to the pandemic, the news of another extension actually came a week later in a statement from the Housing and Business secretaries.

Property owners and investors will now have a further three months during which their inability to pursue non-paying tenants in the courts will not only inflict further financial pain for those reliant on the income from commercial property investments but will also increase the levels of outstanding debts accrued by tenants unwilling or unable to pay.

“Extending the moratorium again simply delays the inevitable while increasing the burden on pension funds, insurance companies and other institutional investors,” said Steph Yates of Remit Consulting.

“Our research shows that there is a hard-core of business occupiers that are choosing not to pay rent. They remain in occupancy but are not paying rent. To paraphrase Schrödinger, these tenants are simultaneously both alive and dead.

“The question among the property managers and asset managers that we have spoken to is how the mounting debts being accrued by tenants are to be dealt with. There is an expectation within the real estate market that, with mounting debts among tenants, CVAs will be an attractive solution to many occupiers who have been able to avoid paying rent without fear of eviction.”

Government statistics, provided by The Insolvency Service show that during 2020, the number of insolvencies, including CVAs, in the UK was at its lowest since 2010.

“It is possible that the non-payment of rent has allowed some companies to avoid collapse during the pandemic, and it’s hard not to see the Government’s moratorium as a multi-billion pound injection of cash by landlords and investors into businesses that are effectively insolvent,” added Steph Yates.

According to research by Remit Consulting, since the start of the pandemic and the announcement of the moratorium, owners of commercial property investments have, overall, seen a shortfall in their income of around 20-25% each quarter. The firm’s ongoing research regarding the collection of rent points to a similar shortfall at the end of the current quarter, which will mark 12 months since the start of the U.K.'s first national lockdown.

The data reveals that over the nine months of the pandemic, commercial property landlords in the UK experienced a total shortfall in their incomes of around £4.2 billion. It is estimated that by the end of March this figure will be around £5.5 billion.

Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms since the start of lockdown in March 2020, working 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) in a study of around 125,000 leases on over 31,000 prime commercial property investment properties across the country.

NB. This article was edited following the announcement by the Government on the 10th March 2021.

Retail property rent collection levels fall compared to previous quarter

• Rent payments on retail property down around 5% compared to the same stage of the previous quarter

• Office and industrial markets performing closer to pre-pandemic levels

Remit Consulting’s latest research into the collection of rent and service charges from tenants in commercial properties reveals that while the rate of collection of rents in the current quarter is broadly similar to those seen in the previous quarter, in certain sectors, rent payment rates fell in comparison.

The research shows that 35-days after the December Quarter Day due date, payments by retailers were down around 5% compared to the same stage of the previous three-month period.

“In the office and industrial markets, we recorded rent collection rates of 89.8% and 86.8% respectively,” said Steph Yates of Remit Consulting.

“Drilling deeper into that data reveals that the rent collection from occupiers on business parks and out-of-town locations, along with those from specialist distribution and logistics occupiers, were even higher and, 35-days into the quarter, reached around 94%. These figures are not far off what we witnessed in the pre-pandemic REMark study of 2019.

“However, the situation in the retail market has deteriorated over the last three months and, after 35 days of the current quarter, only 45.9% of rents had been collected from high street retailers and just 31.6% of rents had been collected from pubs, bars and restaurants,” she added.

The research reveals that, overall, the figures for rent and service charge collection are following a similar pattern to that witnessed in the previous quarters of the pandemic, and suggest that, by the end of March, there will be a further shortfall in the income of landlords of around 20%.

Laura Andrews of Remit Consulting commented: “If the rate of collection of rents from commercial occupiers continues on its current trajectory, we can expect a total shortfall over the first twelve months of the pandemic of around £5.5 - 6.0 billion.

“The next Quarter Day will coincide with the anniversary of the first lockdown of the pandemic, along with the end of the Goevernment’s moratorium of the eviction of commercial tenants for non-payment of rents due to Covid-19.

“With many businesses, particularly those in the retail and hospitality sectors, still struggling to pay their rent, the future is looking particularly bad for the High Street. With the end of the Government’s moratorium on the eviction of commercial tenants looming at the end of the quarter, March could prove to be a perfect storm for tenants of commercial property,” she added.

Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms since the start of lockdown in March 2020, working 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) in a study of around 125,000 leases on over 31,000 prime commercial property investment properties across the country.

Remit Consulting's rent collection research paints gloomy picture for the High Street.

• Rent and service charge payments on commercial property remain low

• Hard-core of tenants still unable or unwilling to pay

With the end of the Government’s moratorium on the eviction of commercial tenants looming at the end of March and with many businesses, particularly those in the retail and hospitality sectors, still struggling to pay their rent, the future is looking bleak and particularly bad for the High Street, according to the latest research from Remit Consulting.

The firm of management consultants has been analysing the collection of rent and service charge payments by the country's largest property management firms since the start of lockdown, working 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) in a study of around 125,000 leases on over 31,000 prime commercial property investment properties across the country.

The latest figures published by Remit Consulting reveal the volume of rent and service charge payments made by business occupiers since they became due on December Quarter Day (Christmas Day). The research reveals that, overall, 67.2% of rents and 63.7% of service charge payments had been received within 21-days of the due date – broadly the same as in the previous quarters during the Covid-19 pandemic. The data shows that office and industrial sectors saw increases in rent collection rates compared to the same stage in the September quarter, while the retail and leisure sectors saw falls.

“The current quarter is closely mirroring the collection rates seen in the preceding quarters during the pandemic and while the collection rates are not worse than in the previous quarter, the forecast is not looking good and there are storm clouds on the horizon,” said Steph Yates, a senior consultant at Remit Consulting.

“If payment of rent and services charges continue to follow the pattern seen previously, the expectation will be for around 80% of rents and service charge payments to have been met by the end of March. This appears to be the new normal for the commercial property market and reflects not only the economic uncertainty caused by Covid-19 and the inability of some tenants to pay, combined with the reluctance to pay by others.”

Remit Consulting highlights that this makes the ending of the Government’s moratorium on evictions in March a big deal for the market, particularly in the retail and leisure sectors, where collection rates for both rent and service charges have been consistently lower during the pandemic. The report suggests that if collection rates follow the form book, owners of retail and leisure properties can, at the end of the quarter, expect to see a shortfall of around 25% for retail properties and maybe 40% on leisure properties.

The REMark report suggests that, following the end of the moratorium, there are four groups of potential behaviours for those who are currently not paying:

1. Those who have agreed payment plans with their landlords

2. Those who plan to pay going forward without paying any back-dated rent and service charge payments (“non-payment plans”)

3. Those who cannot pay and will cease trading

4. Those who choose to pursue a Company Voluntary Arrangements (CVA)

“With service charge payments being excluded from the Government moratorium on evictions, the data suggest that around 25% of retail occupiers are either unable or unwilling to pay their rent, with an even higher proportion of leisure property occupiers in the same situation. These tenants must be considered to be vulnerable to insolvency, bankruptcy and eviction,” said Steph Yates.

“While the prospect of so many business premises becoming vacant as a result of the pandemic is of concern to everyone involved directly with the property sector, from property managers and asset managers to the pension funds, insurance companies and other institutional investors, it should also be worrying local authorities and town planners who could well see the impact of insolvencies in the coming weeks and months. Since last March the sustainability of businesses and the impact of the pandemic on the property market has, in the main, remained hidden, impacting only landlords, investors and property managers.

“At the end of this quarter, the effects on our towns and cities may become much more tangible,” she added.

Remit’s online ReTour event highlights the growth of cycling and active travel provision within the office market.

Remit Consulting hosted the first of four virtual “ReTour” events on the 14th January, with panellists from Make Architects, CO-RE, the London Cycling Campaign, 22 Bishopsgate and SpokeSafe.

Before the pandemic, the ReTour events featured a peloton of property professionals cycling around central London to visit some of the most innovative examples of cycling and active travel facilities in office buildings around the West End, Midtown, the Square Mile and the City Fringe.

The first of the Covid-19 versions of ReTour proved to be far more relaxed with over 350 people attending the webinar from the comfort of their own Internet connection!

Annie Panteli, operations manager at 22 Bishopsgate in the City of London was the event’s first speaker who described how the 62-storey building’s ‘Bike Park’ has quickly evolved into the ‘Active Commuter Park’ (ACP) and a place that can support all active travellers who work within the City landmark building.

The ACP provides 1,700 bike spaces of different designs (many with e-charging points), 1,300 lockers, 75 showers and a facility to hire bikes for short journeys around the city.

Highlighting the need for improvements to infrastructure all around London, Annie explained that, as part of the building’s initiative to provide “Active Commuting as a service”, a survey of occupiers was undertaken early on in the process. While this confirmed the demand for secure storage within the building (which can be accessed by the 22 Bishopsgate App) the biggest concern of occupiers was their safety on crowded streets and pavements during their journeys to and from the workplace.

Max Wilson of SpokeSafe picked up on the need for improved cycling facilities around the capital and described how his company is looking to help property owners to improve facilities for cyclists and monetise underutilised spaces in buildings by providing secure bike parking spaces that are accessible via a mobile app.

He also confirmed that during the pandemic SpokeSafe had noted a higher demand for storage facilities suitable for e-bike charging to the extent that the next facility to be opened in central London would have 25% of the spaces dedicated to e-bikes. Max attributed this to a widening of the demographics of cyclists with an increased number of older people choosing to cycle.

“We’ve also got of demand from the logistics market, like Uber Eats and Deliveroo,” he said, outlining their specific needs in terms of space and the high frequency of use with many visits to and from the storage facility during the day. He confirmed that future SpokeSafe facilities would have a clear delineation of users to separate the logistics users from commuters.

Max outlined his vision that with a growing network of SpokeSafe Hubs, outdoor lockers and third-party spaces managed by SpokeSafe the business could “provide cyclists, with nothing more than a phone and their own bike, access to an entire network of spaces.”

Access to bike storage, showers and lockers is also a key focus at 20 Ropemaker Street, the 450,000 sq ft, 27-storey development designed by Make Architects.

David Ainsworth of CO-RE, who is the development and project manager for the landmark office scheme, confirmed that the provision of high-quality cycling and active travel facilities was a key factor in the 2020 pre-let deal with law firm Linklaters of over 300,000 sq ft.

The property’s architect, Robert Lunn of Make Architects said that the building’s design featured a dedicated, principal entrance for cyclists and active commuters that would make it a “true entrance” and front door and highlighted that this was very important as, with potentially 800 bikes being stored in the building, it could be the main arrival and departure point for between 15 and 25% of all the occupiers.

He told the ReTour audience of the attention that had been taken in considering how to get so many cyclists, along with other active travellers, in and out of the building efficiently. This has been achieved through the use of a wide, shallow staircase with powered wheel ramp and lifts leading to a diverse range of cycle storage solutions, lockers and shower facilities.

The diversity of active travel methods and cycles was also picked up in the presentation by Stewart Dring of the London Cycling Campaign, which has seen great changes and advances during the pandemic. He highlighted the fact that more people are cycling around the capital, increasing the need for more cycling and better cycling infrastructure.

He praised the fact that “decades of progress had been made in a matter of months,” confirming that, before the pandemic, the Mayor of London has been looking to triple the amount of segregated cycle space over four years, five times as much had been put in place between the start of the pandemic and the end of the year.

Stewart also confirmed that London’s ‘Street Space’ programme would see further changes in the future with additional cycle lanes and wider paths, with more measures aimed at reducing access for cars to create low-traffic neighbourhoods.

Stewart suggested that an increase in cycling would improve many of the issues facing London, such as obesity and pollution, making the capital a more healthy and sustainable global city. Which can only be good for everyone.

The second ReTour event will look at the provision of cycling and active travel facilities within office properties across the UK and will be held on Thursday 25th February at 1700 and you can register by clicking here

REMIT CONSULTING CONFIRMS THAT COMMERCIAL PROPERTY INVESTORS SAW A £4.2 BILLION SHORTFALL IN RENT COLLECTION IN 2020

• Fears grow among investors, property and asset managers over the impact of tenants’ bad debts

• Collection rates in December Quarter no better than at the start of the pandemic

Pension funds, insurance companies, REITS and other investors in commercial property experienced a shortfall in rental income of £4.2 billion last year, according to the latest research from Remit Consulting.

Working 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), Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms since the start of lockdown. The research covers around 125,000 leases on over 31,000 prime commercial property investment properties across the country.

The latest data published by the management consultants reveals that in December, at the end of the September Quarter, there was an overall shortfall in rent collection from tenants of commercial properties of 20.9%.

“When combined with similar shortfalls from the March and June quarters, we calculate that the collective loss to investors between the start of the pandemic and the end of the year totalled over £4.2 billion,” said Steph Yates, a senior consultant at Remit Consulting.

“On the basis that much of this unpaid income will be considered as ‘bad debts’, institutional investors who rely on rental income to help fund pensions, insurance payments and savings are dealing with significant losses and the shortfall has implications beyond the sector,” added Steph Yates.

The collection of rents that became due for payment by tenants on Christmas Day (December Quarter Day) have shown a similar pattern to those witnessed in the three previous quarters. However, the collection rates of service charge payments once again increased.

“The collection of service charge payments improved consistently during 2020,” said Steph Yates.

“With a greater emphasis and demand for property maintenance, cleanliness and security during the pandemic there is a realisation by many tenants that service charge payments are essential to keeping buildings functioning and usable. The fact that service charge payments are excluded from the Government’s moratorium of evictions might also have influenced the increased levels of payments,” she added.

“While last month's announcement that the moratorium on evictions will end in March provides some clarity to the situation, the impact of Covid-19 on the real estate market is not, as the government suggests, simply a question of landlords and tenants trying to ‘reach agreements on rent’.

“Our research suggests that around a quarter of all commercial property leases are subject to rent concessions and ‘holidays’ or have been renegotiated since the start of the pandemic. The fact that a week after they were due to be paid more than 40% of rent was still outstanding overall suggests that

there is still a hard-core of tenants unwilling, or unable, to pay what they owe who are still not communicating with their landlords,” she added.

Melanie Leech, Chief Executive, British Property Federation said: “It is a bleak start to 2021 for businesses already hard hit by the impact of Covid-19. Property owners remain committed to supporting these businesses but themselves face significant pressure as mass non-payment of rent continues.

“It’s more important than ever that businesses that can afford to pay, but have exploited the moratorium and avoided payment, now pay their debt. Those businesses that are truly struggling and have not already engaged will need to come forward, treat property owners as economic partners, be transparent about their finances and work collaboratively to create a sustainable path forwards. The Government should do everything it can to incentivise this including extending relief from the crippling cost of business rates in 2021.”

REMIT CONSULTING WARNS COMMERCIAL PROPERTY INVESTORS TO EXPECT A 20% SHORTFALL IN RENT COLLECTION THIS QUARTER

• Collection rates still no better than at the start of the pandemic

• Fears grow among investors, property and asset managers over tenants’ bad debts
  and the threat of CVAs

The collection of the rent due on commercial properties in the UK is continuing to mirror those witnessed in the early stages of the pandemic, according to the latest research from Remit Consulting which projects a further shortfall for investors of around 20% at the end of the current Quarter. 

The study relates to the collection of rent and service charge payments by 3rd of November, 35-days after the September Quarter Day and two-days before the start of the second national lockdown. The firm’s analysis of rent and service charges collected shows that, five weeks after the September Quarter Day due date, 72.7% of the rent on commercial properties had been collected overall, along with 69.8% of service charge payments.  

At the same stage in the March Quarter this year, 74% of rents had been collected and 63% of service charge payments had been received. 

Steph Yates, senior consultant at Remit Consulting, said: "It is evident that the stricter restrictions and limitations that had been imposed by the Government in some parts of the UK earlier in the Quarter, and the expectation of a national lockdown had little impact on the ability or willingness of business occupiers to pay their rent.  

“Seemingly, the propensity of tenants to pay what they owe is not influenced by the level of the restrictions placed upon the population. While the full impact of the second national lockdown on rent and service charge payments remains to be seen, landlords and property managers are concerned, particularly with regard to the retail and leisure sectors. 

“The trajectory for the rest of this quarter indicates a further substantial shortfall of approximately £1.5 billion can be expected by landlords and investors by the end of next month. We have previously calculated that, over the first six months of the pandemic restrictions, the cost to pension funds, rates, institutions and other commercial property landlords was in excess of £3 billion.  These shortfalls effectively become treated as bad debts, meaning that, by the end of the year, landlords could be facing a total deficit in rent alone of up to £4.5 billion.” 

The shortfall in terms of the service charges owed by businesses on the properties they occupy is also outlined in Remit Consulting’s research.  These costs cover building maintenance, insurance, security and cleaning, etc.  The Government’s moratorium on pursuing unpaid rent through the courts during the pandemic does not cover the payment of service charges and the non-payment of these costs by tenants adds further pressure to landlord and tenant relationships. 

“The extension of the Government’s moratorium on forfeiture for non-payment of rents by tenants of commercial properties in August eased the prospect of Company Voluntary Arrangements (CVAs) being exercised by business occupiers unable, or unwilling, to pay their debts. As the quarter progresses there are growing concerns with property managers, asset managers and investors that mass CVAs within the market could become a reality. 

“In addition, there is a growing unease among investors concerning the impact that the drop in income could have on their ability to meet repayments on loans secured against properties. The impact of this could be disastrous for more highly leveraged businesses,” added Steph Yates. 

Working 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), Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms since the start of lockdown. The research covers around 125,000 leases on over 31,000 prime commercial property investment properties across the country. 

TIGHTENING OF COVID-19 RESTRICTIONS SEES A SLOWING IN COLLECTION OF COMMERCIAL PROPERTY RENTS ACCORDING TO REMIT CONSULTING

• September collection rates mirroring those seen in earlier stages of UK lockdown

• Fears grow among investors, property and asset managers over tenants’ bad debts
  and the threat of CVAs

The collection of the rent due on commercial properties in the UK slowed slightly in recent weeks and is mirroring the rate of increase witnessed earlier in lockdown, according to the latest research from Remit Consulting. 

The analysis reveals that overall, 21-days after they were due to be paid on the September Quarter Day, 67.8% of rent had been collected along with 65.3% of service charge payments. By comparison, after 21-days in the March Quarter 67% of rents had been collected and 56% of service charge payments had been received. 

Steph Yates, senior consultant at Remit Consulting, said: "The latest figures come after the introduction of tighter Covid-19 restrictions on large parts of the country. What we are seeing is that the rate of rent collection from business occupiers has slowed but continues to follow a similar pattern to the previous two Quarters.  

“However, both the March and June Quarters saw a substantial shortfall for landlords and investors and we previously calculated that, over the first six months of the pandemic restrictions, the cost to pension funds, rates, institutions and other commercial property landlords was in excess of £3 billion. With the current rate of collection, we can reasonably expect a further shortfall of approximately £1.5 billion at the end of this Quarter. 

“At the end of each Quarter these costs effectively become treated as bad debts, meaning that, by the end of the year, landlords could be facing a total shortfall in rent of up to £4.5 billion. 

“Before the Government’s last extension to the moratorium on rent payments, we understand there were reports of CVAs (Company Voluntary Arrangements) being prepared by business occupiers who were unable, or unwilling, to pay their debts.  While the extension of the Government’s moratorium announced in August removed this immediate threat, there is a growing concern among property managers, asset managers and investors that the prospect of mass CVAs could become a reality.”  

“This could prove disastrous for the property sector and the institutional investors that rely on the income from real estate to help fund pensions, insurance payments and savings,” she added.  

Remit Consulting’s research also highlights the shortfall in terms of the service charges owed by businesses on the properties they occupy.  These costs include items such as building maintenance, insurance, staff costs, security and cleaning.   

“The payment of service charges is not covered by the Government’s moratorium on pursuing unpaid rent through the courts during the pandemic, and the non-payment of these costs by business occupiers can only add further strain to the relationships between landlords and tenants,” said Steph Yates. 

Working 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), Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms since the start of lockdown. The research covers around 125,000 leases on over 31,000 prime commercial property investment properties across the country. 

LATEST RESEARCH FROM REMIT CONSULTING REVEALS INCREASED COLLECTION OF COMMERCIAL PROPERTY RENTS

• 62% of rents due from business occupiers over the first seven days of the quarter

• 12% increase compared to same stage in previous quarter

• Remit Consulting’s research suggests better landlord and tenant cooperation

• Leisure and hospitality sector continues to struggle with rent payments

The overall collection of commercial property rents in the UK, a week after they were due to be paid on the September Quarter Day was almost 12% higher than the figure recorded in the previous quarter, according to the latest research by Remit Consulting.

The reconciled data, published by Remit Consulting in its latest REMark Report, reveals that seven days after rents were due, overall, 62.0% of rents due on commercial properties had been collected, almost 12% higher than in June and just over 5% higher than the figure witnessed at the same point in the March quarter.

The figures for service charge collections show that 56.3% of service charge payments had been received seven days after the September due date.

Working 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), Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms representing many of the main pension funds, REITS and other institutional investors, since the start of lockdown. The research covers around 125,000 leases on over 31,000 prime commercial property investment properties across the country.

Steph Yates, senior consultant at Remit Consulting, said: "While the figures relate to the period before the latest Government announcement regarding its three tier lockdown measures, the figures suggest a growing confidence among commercial property tenants and it is evident that landlords and tenants are cooperating to meet the challenges of the pandemic. There is also evidence that landlords are working closely with smaller tenants to make sure that they survive the ongoing crisis.

“This will be particularly important in the leisure and hospitality sector, which has by far the lowest collection rates,” she added.

Remit Consulting has calculated that over the first six months of the pandemic restrictions, there was a shortfall in rents collected by pension funds, rates, institutions and other commercial property landlords in excess of £3 billion. Despite the improved figures for the September quarter, the management consultancy expects the shortfall to continue to rise towards the end of the year.

COLLECTION FIGURES REVEAL THAT OVER 50% OF COMMERCIAL PROPERTY RENTS WERE PAID ON SEPTEMBER QUARTER DAY

• Payments from business occupiers rose by 12.7% compared to June

• Growing concerns regarding the ability of some investors to make loan repayments

• Hard core of business occupiers continue to not pay their rent

Over 50% of rent due from commercial property occupiers was collected on the September Quarter Day, according to the latest research by Remit Consulting, representing an increase of 12.7% compared to the previous quarter and higher than many industry insiders had feared.

The reconciled data, published by Remit Consulting for the September Quarter Day collection figures reveals that, overall, 50.5% of the rent due, and 44.4% of service charge payments were collected on last week's due date, compared to 37.8% and 33.0% respectively on the June Quarter Day.

Working 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), Remit Consulting has been analysing the collection of rent and service charge payments by the country's largest property management firms representing many of the main pension funds, REITS and other institutional investors, since the start of lockdown. The research covers around 125,000 leases on over 31,000 prime commercial property investment properties across the country.

When compared with the June Quarter Day figures, Remit Consulting’s research shows that the collection of rent from retailers rose by 11.8%, those in the industrial sector rose by 17.3%, and office occupiers by 12%. The collection of rent from occupiers of leisure properties increased by just 5.7%.

Commenting of the research, Steph Yates, a senior consultant at Remit Consulting, said: “The increase in rent and service charge payments is welcome news, and while the figures for September Quarter Day are certainly not as bad as had been feared by many property and asset managers, the crisis is far from over.

“There is a growing unease among property owners and asset managers regarding the repayment of loans secured against buildings. Some investors are raising concerns that the drop in income is going to seriously affect the loan repayments they are capable of making. The impact of this could be catastrophic for more highly leveraged businesses.

“The latest collection rates are fairly similar to those recorded at the beginning of lockdown, which were significantly lower than the same period in 2019, and investors are monitoring the situation closely and are increasingly requesting detailed updates on a daily or weekly basis.

“We calculate that, over the last six-months, there has been a shortfall in rents collected by pension funds, REITS, institutions and other commercial property landlords in excess of £3 billion. Despite the improved figures for September Quarter Day, we still expect a further, significant shortfall this quarter,” she added.

Melanie Leech, chief executive of the British Property Federation commented: “While the majority of property owners and tenants are working well together to navigate this pandemic’s economic impact, the Remit Consulting figures suggest that well-capitalised businesses who have been refusing to pay rent, or engage with property owners, have not heeded Ministers’ reminder that those who can pay their rental debts should do so. This is incredibly frustrating and undermines both support for those businesses in genuine distress and future investment for our towns and cities.”

Paul Bagust, RICS Global Property Standards Director, said: “It’s essential that landlords and tenants from businesses big and small continue to work with each other to agree on how rents and service charges can be paid to ensure as many as possible survive and then thrive, which benefits us all”.

Vivienne King, Chief Executive at Revo, said: “ Whilst it is positive to see this moving in the right direction, it is clear that while the moratoria are in place we are going to continue to see huge shortfalls in rent paid, which is simply not sustainable. The pressure is mounting on property owners who are singled out to bear billions in lost income which poses a systemic risk that impacts us all.

“We need a clear direction from Government as to how we will transition out of this distorted situation where contractual arrangements are effectively being disregarded, and more pressure must be applied to those large well-capitalised businesses that are choosing not to pay.”

£3 BILLION MISSING FROM UK’S PROPERTY INVESTMENT MARKET SINCE START OF LOCKDOWN

• Only 72.5% of rent due to landlords on commercial properties was received over the June Quarter

• Prospects for September Quarter “look bleak”

As quarterly rent demands begin to land on the desks of business occupiers, Remit Consulting reports that pension funds, institutions and other investors in the UK commercial property sector have experienced a further £1.5 billion shortfall in the collection of rent over the June Quarter. Remit’s research shows that, since the start of lockdown, over £3 billion in rental income has now been lost by property investors.

Working with the British Property Federation, RICS, PIA, Revo and other professional bodies, and based upon the analysis of 125,000 property leases, Remit Consulting has been studying the collection of rent and service charge payments by the UK’s biggest property management companies since the start of the Covid-19 lockdown in March.

“Our analysis of the verified figures for the total rent collected 90-days after the June Quarter Day by property managers reveals that, overall, just 72.5% of payments due on commercial properties were received investors in the UK market. This is 6.4% lower compared to the previous quarter,” said Steph Yates, senior consultant at Remit Consulting.

“Based on data from the IPF, regarding the total value of UK property investments, this equates to a shortfall in excess of £1.5 billion over the last three-months. On the basis of our previous research for the March Quarter, this means that the income of pension funds and other investors now totals over £3 billion so far during the pandemic.

“With the moratorium on forfeiture for non-payment of rents by tenants of commercial properties still in place, local lockdowns and with people being encouraged to work at home, it is hard to see that this situation will improve by the end of the year. The prospects are looking bleak and if the Prime Minister's suggestion that the current restrictions could be in place for six months, it may well be much longer,” she added.

Melanie Leech, Chief Executive, British Property Federation said: “It is disappointing to see that the total shortfall in unpaid commercial rents has simply doubled over the past two quarters. While for many recovery is still at risk and more support will be vital, we continue to see well-capitalised businesses taking advantage of Government interventions and refusing to pay rent. All signals are pointing towards a total of £4.5bn in unpaid rents by the end of December, which is too high a mountain for businesses and property owners to climb on their own.”

UK rent and service charge collection data (March Quarter Day 2020 +90 days)

Note: The below figures are commercial averages only.

THE PANDEMIC’S GROWING THREAT TO UK PENSIONS

While the former pensions minister, Steve Webb, warns in The Guardian that the UK’s ‘pensions lifeboat’ scheme is at risk from “a huge wave of corporate defaults” as a result of Covid-19, company collapses and corporate defaults are not the only threat to pensioner incomes caused by the pandemic.

Since the start of lockdown in the UK, Remit Consulting has been working alongside the RICS, BPF, and other industry leaders, to produce a regular analysis of rent and service charge collection levels. Based on the reconciled figures reported to investors by their managing agents the research has involved data regarding around 125,000 leases on 31,500 prime commercial property investments across the country. 

Using the IPF’s market size data, we calculated that the shortfall in the March quarter equated to £1.5 billion. As we head toward the end of the June quarter, with collection rates following a near-identical trajectory, there is a strong prospect for a similarly bad quarterly shortfall and an income loss to the industry of £3 billion since the outset of lockdown is more than plausible. 

This prospect is a big concern, as a fall in the income of the pension funds, REITS and other investors will inevitably hit the wider population. As The Guardian article highlights, the income of many pensioners and savers is reliant on the performance of these institutions.

To keep up to date with the latest data on rent collection and service charge collections during the pandemic, please visit the register for our newsletter or follow us on LinkedIn and Twitter.