The collection rates of rent and service charge payments on commercial property improved over the first seven days following the March Quarter due date, according to the latest research from Remit Consulting.
“Although the amount of rent and service charges collected on the due date was one of the lowest figures for a Quarter Day over the past year, we recorded a small recovery in the rate of payments over the first week of the Quarter and reached very similar levels to those experienced previously during the pandemic,” said Steph Yates, senior consultant at Remit Consulting.
“While, on the face of it, this is good news and the trajectory of collection rates appears to be in line with those experienced over the past year, we should not forget that this ‘new normal’ is still around 30% lower than in a typical, pre-Covid, Quarter and that investors and property owners have seen a shortfall of over £5 billion since the start of the lockdown restrictions in March 2020. This equates to £1 in every £6 of rent due going unpaid,” she added.
Laura Andrews of Remit Consulting added: “With the recent relaxation of some of the Government’s Covid-19 restrictions it is hoped that the collection rates may improve further, particularly for retail and leisure occupiers, and the next few weeks will provide a clearer picture as to the scale of any shortfall at the end of June when the Government’s moratorium on evictions for non-payment of rent is due to be lifted.
“The longer that the moratorium is kept in place, the greater the damage being inflicted on pension funds and other institutional investors will become clear and our research shows that there is still a hard-core of tenants who are either unable to pay or are choosing not to pay.”
Remit has also noticed an overall change in behaviour – the spread of rental payments over the quarter may suggest a long-term movement to monthly payments.
“Over the past twelve months, many tenants and landlords have agreed on concessions and revised payment plans. Such agreements have seen an increase in the number of business occupiers paying rent monthly, and it remains to be seen if this will become a common feature of leases on commercial property in the future,” Laura added.
During the Covid-19 pandemic, Remit Consulting has worked in conjunction with the British Property Federation (BPF), the RICS, Revo, the Agent's Advisory Group, and other members of the Property Industry Alliance (PIA), analysing the collection of rent and service charge payments by the country's largest property management firms.