Retail rent day may see 25pc paid to landlords

retail sales
MANCHESTER, UK - APRIL 22, 2013: People visit shopping area in Manchester, UK.

Wednesday 24 marks rent day for retailers across the UK, who need to pay rent for the next three months. For landlords, it is unknown how much of what they are owed can be collected.

The last day that landlords hoped to collect £2.5bn in rent was just after the lockdown was imposed and retailers, restaurants, and pubs were forced to close – meaning only about 50% of rent was paid in total.

Today, it is expected for that figure to be cut to 25% after businesses have been closed for three months.

Ramzi Kattan, a real estate analyst at the credit rating agency Moody’s Investors Service, said: “We expect a grim day. Weaker cashflow, struggling tenants and reduced demand for commercial space will weaken credit metrics and contribute to a more challenging operating environment. Retail landlords will be particularly hard hit.”

For many businesses across the UK, rent with landlords is being negotiated. Primark, JD Sports, and Boots have stopped paying rent for their stores.

Bill Hughes, Legal and General’s head of real assets, explained what the lack of rent would mean to landlords.

“It’s not well known, or particularly transparent to people, but most retail properties are effectively owned by the normal person on the street in the UK. The risk of loss of income is really important. The pension fund owners of the built environment of the UK, they rely upon the income being produced by what hitherto have been seen as being very stable assets. And that is at risk in a way that’s never been there to the extent before,” he said.

For those landlords who cannot collect rent, the government has banned commercial landlords from taking legal action against tenants until the end of September.