Collection Of Commercial Rent Improves But Pandemic Shortfall Continues To Grow

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.