A new law has been announced by the UK government that will introduce will provide a legally binding process to resolve the remaining commercial rent debts and to ‘protect tenants from rent debt claims against them’. The legislation is aimed at helping the commercial property market return to normality.
At the end of the June Quarter of 2021, Remit Consulting calculated that the total shortfall in rents collected by landlords and managing agents over the pandemic had reached over £6.97 billion.
In the current financial quarter, 21 days after the September Quarter Day due date, the collection of commercial property rents in the UK reached an average of 81.9%, meaning that almost 20% of commercial property rents were still outstanding for the current payment period.
“While the introduction of the new law should bring clarity for both landlords and tenants, in the meantime there is still the question of the total shortfall of rent payments received by commercial property landlords and investors during the pandemic, which will now exceed £7 billion. There is no certainty that all of this money will ever be recovered under the new legislation,” said Steph Yates of Remit Consulting.
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.
Remit Consulting’s research has confirmed a significant improvement in the rate of collection compared to previous quarters during the pandemic.