Britain’s retailers paid just 13.8 per cent of their rent for the last quarter, in a sign of how hard the coronavirus pandemic has hit the sector.
Rent receipts on 24 June, the day commercial tenants’ payments were due for the quarter, were even lower than those three months ago, according to commercial property management platform Re-leased.
It is a fall from the 25 March payment, where 20 per cent of rent payments were made.
The statistics indicate rising pressure on both tenants and landlords, with the latter coming up short to the tune of £2.15bn in unpaid rent for the June quarter.
Total commercial rent receipts were 18 per cent, compared with 25 per cent in March.
Office landlords saw the sharpest decline, from 31 per cent to 23 per cent.
Re-Leased’s analysis is based on live rental collection data from 10,000 commercial properties and 35,000 leases on its UK platform.
Tom Wallace, Re-leased’s CEO, said “For months, the industry has been speculating what the real impact of coronavirus will be on the UK’s property market.
“June quarter gives us the first real indicator of the severity of the crisis and quantifies the pressure both landlords and tenants are under. Looking at the level of rent that was collected on due date is sobering, but initial signs are not as catastrophic as some were forecasting.
“We expect rent collection to steadily increase over the coming weeks, but it is unlikely to reach the level that we saw in March.”
Non-essential retailers were allowed to reopen last week, however trade has remained well down on normal levels.
Some retailers, including Boots, JD Sports and Primark, are paying depending on progress made in talks over the arrears from the March quarter and future lease arrangements.
Pret A Manger, the sandwich chain, told its landlords it will pay 30 per cent of rent.
It comes after shopping centre giant Intu said earlier this week it had lined up administrators in case ongoing talks regarding the shopping centre owner’s future fail.
It has appointed Big Four accountancy firm KPMG as administrator as part of a “contingency plan” as it continues to engage lenders about new funding.
The owner of the Trafford and Lakeside shopping centres first began talks with lenders in March, but had been struggling financially before the coronavirus pandemic forced the closure of most retail stores.
Robert Hayton, head of UK business rates at the real estate adviser Altus Group, said: “Occupied retail, leisure and hospitality premises in England have received a business rates holiday during 2020/21 worth £10.13bn but landlords have largely been overlooked despite being ask to play their part by waiving or deferring rent to help their tenants survive”.
He added: “It is only fair that there is tax parity and that the rates holiday is extended to those properties vacant and to let.”