Rent collection hits new post-pandemic high

Rent collection across UK commercial properties for the week after September quarter day has reached the highest level since the pandemic began. An average of 82.7% of rents were collected in the seven days after the September deadline, according to the latest figures from Remit Consulting. The result compared with 75.5% collected at the same point in the previous quarter. It was also more than 10% higher than collection rates in the equivalent period in 2021. However, Remit’s REMark report, which covered around 125,000 leases at 31,500 prime commercial properties, also indicated overall quarterly collections have plateaued at around 95%. The report found 4.5% of all rents were still unpaid at the end of the June quarter, 90 days after payment was due. This was 0.1 percentage points lower than the end-of-quarter figure for the March quarter this year. Researchers at Remit also identified a shortfall of around 10% in the collection of service charge payments from tenants of commercial properties.  At the end of the June quarter, 89.8% of service charge payments had been collected, improving from 85.3% at the end of the previous quarter. However, the report’s authors noted it was still “well below the figures experienced before the pandemic and represents a significant shortfall for landlords and investors”. Laura Andrews of Remit Consulting said: “We witnessed a rapid increase in the collection of rents and service charge payments over the first seven days of the current quarter, which is positive news for investors and landlords. However, the total rent collected at the end of the previous two quarters has not changed and remains below the figures of over 99% experienced before the pandemic.  “While the impact of the pandemic is lessening, other economic factors, such as the energy crisis, consumer confidence and higher costs, are now adding to the woes of businesses and it remains to be seen if a 4-5% shortfall in rent collection each quarter is the new normal.” Elijah Lewis, the firm’s research consultant, said: “With costs spiralling, this is a situation that building managers and owners will want to monitor closely. “With inflation at a 40-year high of over 10%, companies and consumers are feeling the impact of a reduction in their purchasing power, and there is an expectation that defaults in rent payments will increase. As the current quarter progresses, we will continue to monitor collection rates to see if they drop and whether the gap between the rent service charge collections widens.” To send feedback, e-mail pui-guan.man@eg.co.uk or tweet @PuiGuanM or @EGPropertyNews