More than £2bn of UK retail rents are likely to have gone unpaid by Tuesday, a property industry body has said, with shop owners collecting less than half of what was due.
Retailers, who pay their rents quarterly, with the July to September instalment due on September 29, will nonetheless be able to keep their stores because the government has banned commercial tenant evictions until the end of the year, property body Revo said.
The government allowed high streets to reopen in July after coronavirus lockdowns and retail sales in August rose marginally on the previous month.
But many shop owners are struggling as furloughed familes have cut their costs and UK households have increasingly shopped online, with department stores and clothing retailers particularly badly hit.
This month, the government extended a ban on landlords evicting commercial tenants until the end of the year.
Vivienne King, Revo chief executive, said: Retail property owners are braced for another hugely damaging quarter, with fears that once again less than 50 per cent of rent due will be paid by operators, whatever their balance sheets.
Ms King said that retailers were able to not pay their rents “whatever the state of their balance sheets”, and claimed that property owners had been singled out as “the fall guys to indiscriminately compensate large and valuable [retail] operators for their cashflow”.
Revo said that in the first and second quarters of this year, rental arrears had hit £1.5bn and were set to exceed £2bn after Tuesday’s payment date for the third quarter.
Strongly criticising the moratoria on evictions, Revo said they were: A short-term emergency measure introduced at the start of lockdown, but nine months is looking very much like long term. The UK is respected worldwide for its stable rule of law but by continuing to allow contractual arrangements to be ignored in one sector, the government is casting doubt on the reliability of our legal system more broadly.
Retailers, for their part, have long argued their rents are unfair because they are set in advance and are the same however their business is doing, instead of being responsive to changes in turnover. In the past few years many struggling shop chains have therefore turned to company voluntary arrangements (CVAs), a legal mechanism that enables them to shut underperforming shops.