Property Week has recently published the results of a survey compiled by Remit Consulting on commercial rent collection, which painted a bleak picture of the market.
According to the Remit survey, just 48% of rent was paid on 25 March 2020, increasing to 57% seven days later. Remit report that the corresponding figures for the same point last year were 79% and 90% respectively. The Remit report also noted that rent collection levels were low in the retail sector, but interestingly were below normal levels in the industrial and office sectors. The collection levels for service charges were even lower.
How are landlords responding to this? As noted in our previous article, there is a moratorium on forfeiture for non payment of rent for commercial tenants in England and Wales until at least 30 June 2020, which clips a landlord’s wings in terms of options considerably. However, some landlords are fighting back.
On 14 April 2020, the BBC reported how tenants running gyms and leisure centres were concerned about the risk of landlords serving Statutory Demands and pursuing winding up Orders in the event of non payment of rent, which are not prohibited under the changes introduced by the Coronavirus Act 2020.
Our experience so far is that the majority of landlords and tenants are working constructively together to navigate through these difficult times by taking steps to ease cashflow for a tenant such as switching to paying rent monthly, rather than quarterly.
Wherever possible, it is important that tenants try to pay some rent because the debt and any interest will continue to accrue unless the landlord expressly agrees otherwise. Landlords may adopt a harder line to flush out whether a tenant simply cannot pay rent or is choosing not to pay rent. This may ultimately involve a tenant sharing more financial information about its business with the landlord in order to secure concessions than it would usually do.