Rental shortfall leaves investors £1.5bn in arrears

Rental shortfall

Property investors have suffered a £1.5 billion shortfall in rental income that was due for the second quarter of the year.

Almost a fifth of rent that was due at the March quarter payday had not been collected 90 days later, according to Remit Consulting.

The research, which is based on the analysis of 125,000 leases, highlights the pressure on property investors, including pensions and savings funds, as analysts predict that the shortfall for the present quarter will be even wider. William Hill, JD Sports, Primark, Boots and Stonegate Pubs are among the companies that did not pay rent on the June quarter rent day.

“The data for the beginning of the current quarter shows that collection rates are on an almost identical trajectory,” Steph Yates, senior consultant at Remit Consulting, said. “With average collection on the June due date over 11 per cent lower than three months earlier, investments in the UK property could see an even bigger shortfall this quarter.”

The retail sector, which was forced to shut outlets during the lockdown, accounted for £780 million of the £1.5 billion of unpaid rent. Only 7 per cent of residential rent has not been collected, compared with 12 per cent of office rent, 32 per cent of retail rent and 16 per cent of industrial property rent.

The British Property Federation, a lobby group, said that the mass non-payment of rent had been fuelled by the government’s six-month moratorium on evictions and the ban on landlords using statutory demands to secure rent.

Melanie Leech, its chief executive, said: “The pensions and savings funds invested in commercial property clearly cannot continue to sustain rental losses on this scale. Those who can pay should pay.” The lobby group has called on the government to cover some of the property costs for the hardest-hit tenants. forced to stop trading and unable to meet their rental debts.

Phil Clark, global head of real assets equity at Kames Capital, the investment group, said: “The majority of responsible tenants and investors are working together to find reasonable solutions, but there is no avoiding the fact that some businesses simply won’t be able to pay and some pension funds will receive less income as a result.”