Rent arrears in the commercial property sector could reach £7 billion by June 2021, according to the latest research, with the coronavirus pandemic having a significant effect on businesses.
The British Property Federation has estimated that the total rent unpaid in the commercial property sector between March 2020 and June 2021 will total more than £7 billion, while the Government could also be set to extend the ban on business evictions.
The ban was initially introduced in April 2020 to help businesses cope with the impact of the coronavirus, but with the first lockdown beginning almost 12 months ago, many businesses have spent large parts of that time either closed or with restrictions on their operations.
The moratorium on evictions for the retail, hospitality and restaurant sectors is set to be extended until the end of June 2021, according to a report in The Financial Times, with the ban currently set to end on 31 March 2021.
However, with many businesses facing cash flow issues, this has resulted in a situation in which commercial property landlords are dealing with an unprecedented level of rental arrears.
Many tenants and landlords have agreed on rent holidays and deferrals during the pandemic, but concerns have been raised that some might not be able to repay the outstanding rent after a difficult economic situation has left their business in a precarious position.
Melanie Leech, Chief Executive of the British Property Federation, said: “Everyone agrees that the majority of tenants and landlords are already working in partnership and creating new plans for the future together.
“A further extension to the moratorium will only delay recovery and the re-setting of the retail, hospitality and leisure sectors. It will prolong the current stalemate between a minority of tenants and landlords.”
For help and advice on matters relating to commercial property, contact our expert team today.