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Rent day sees 80% failing to pay

Less than one in five commercial tenants in the North West paid this quarter’s rent when it was due on Tuesday, according to research by software company Re-Leased.

Nationally, landlords collected 22.1% of commercial rents due on 29 September, this quarter’s rent day, marking an improvement on the June quarter when it was 18.2% on the first day.

The figure for how many paid in the North West was 18.8% on Tuesday, hardly changed from 19.4% at the same stage in June.

The West Midlands was the most resilient region, while the North East was the least resilient. London ranks 5th, collecting 20.2% of rent, slightly below the UK average. The North West was the third worst performing of the 10 regions studied.

Total % of rent collected              (as of day 0) Mar Qtr 2020 Jun Qtr 2020 Sept Qtr 2020
 

West Midlands

29.00% 22.60% 34.60%
 

East of England

30.40% 13.30% 26.00%
 

Wales

16.40% 14.40% 24.70%
 

East Midlands

25.90% 17.80% 23.40%
 

London

21.10% 25.30% 20.20%
 

Yorkshire & Humber

23.00% 17.70% 20.10%
 

South East

26.90% 24.80% 19.80%
 

North West

26.00% 19.40% 18.80%
 

South West

19.40% 15.20% 17.10%
 

North East

36.30% 19.20% 13.40%

Retail properties continue to be the hardest hit and collected just 12.7% of rents due, down on the 13.8% that was collected on June quarter day. Retail was the only sector to see rent collection decrease on the previous quarter, with offices and industrial assets both seeing improvement.

Re-Leased’s analysis is based on live rental collection data from over 10,000 commercial properties and 35,000 leases on its UK platform.

Total % of rent collected (as of day 0) Mar Qtr 2020 Jun Qtr 2020 Sept Qtr 2020
UK – all commercial* 25.3% 18.2% 22.1%
Retail 19.8% 13.8% 12.7%
Office 31.2% 22.8% 31.8%
Industrial 23.0% 16.2% 18.3%

*Includes other asset classes with smaller sample sizes (e.g. leisure)

Yesterday’s initial take compares with the 25.3% and 18.2% of rent that was collected nationally on the March and June quarter days, respectively. The rent collection curve improved considerably for both previous quarters, with around two-thirds of rent collected 60-days after due date.

Tom Wallace, Re-Leased’s CEO, said “To see overall rent collection improve on the last quarter day is reassuring, especially following the new restrictions for businesses announced by the government last week and the recent extension of the rent moratorium. While there remains uncertainty in the market over rising coronavirus cases and the possibility of further restrictions, initial signs suggest the rent collection curve over the next 60 days will be on par with March and June.”

“These figures will however be very concerning for retail landlords with rent receipts continuing to decline. Retailers are trading in the toughest of circumstances but those who are well-capitalised and can pay some or part of their rent should. Landlords now face huge financial pressure on meeting their own debt obligations.”

The British Property Federation estimates total rent unpaid for UK commercial property between late March and the end of December will be around £4.5bn.

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