Following the 2020 December Quarter Day, it has been reported that one of the UK’s largest commercial landlords, British Land, has received only 46% of rents owed to it by retailers. This is a stark contrast to the 95% of rent which British Land received from offices for the same period.
Although it is likely that store openings outside of Tier 4 during the Christmas period gave retailers some light relief, the market has seen a number of high-profile CVAs and Lockdown 3.0 is set to cause more difficulties. Many retailers have been forced to close their doors to customers once again (except to online customers) and this position is unlikely to change for some time.
Back in March 2020, when non-essential retailers were first ordered to close their premises, the government was quick to act to protect commercial tenants by restricting forfeiture of commercial leases for non-payment of rent. This was followed by the restrictions on the exercise of CRAR and the presentation of winding-up petitions unless a landlord could meet the “Coronavirus test”. In December 2020, the government extended those restrictions until 31 March 2021. (Please see our December Quarter Day page for further details: https://www.charlesrussellspeechlys.com/en/news-and-insights/insights/real-estate/2020/need-to-know-dealing-with-2020s-december-quarter-day/ )
The government announcement – made before Lockdown 3.0 – indicated that this is the “final extension” of restrictions on remedies. Even if this proves to be the case, it is possible that some tenants will owe over a year’s rent by this point and this is placing increasing financial pressure on landlords.
It is clear that both landlords and tenants continue to be severely affected by the Coronavirus pandemic nearly a year after the restrictions were first imposed, with concern over the uncertainty as to when Lockdown 3.0 will end and whether the current restrictions on landlords’ remedies will be extended beyond March 2021. Nonetheless, British Land remains optimistic and expects collection rates to improve over the coming weeks, particularly with the vaccine rollout underway.
"Positive vaccine news and the relaxation of coronavirus restrictions in the run-up to Christmas fuelled hope that retailers’ incomes might start to improve, but the latest lockdown measures have stymied any recovery."