Two-thirds of UK shops face looming legal action on rents

LONDON, ENGLAND - APRIL 12: A general view of a quiet Oxford Street before the shops reopen today as coronavirus restrictions ease on April 12, 2021 in London, United Kingdom. England has taken a significant step in easing its lockdown restrictions, with non-essential retail, beauty services, gyms and outdoor entertainment venues among the businesses given the green light to re-open with coronavirus precautions in place. Pubs and restaurants are also allowed open their outdoor areas, with no requirements for patrons to order food when buying alcoholic drinks.  (Photo by Dan Kitwood/Getty Images)

Debt collection is set to resume in the UK on 1 July for many troubled businesses. Photo: Dan Kitwood/Getty Images

Two-thirds of retailers are facing legal action on rents in a month, as a moratorium on aggressive debt collection ands on 30 June. 

Thousands of retailers will be open to legal action on the rent payments they may have missed due to COVID-19 closures, according to new research released by the British Retail Consortium (BRC). 

With many retailers closed for large periods during the last fifteen months, many have accrued huge debts that they are only just beginning to be able to pay.

Total rent debt is estimated to be £2.9bn ($ 4.1bn).

The BRC said that already, one in seven shops lie empty, with this number expected to rise.

A new survey of retailers by the BRC shows that two-thirds of retailers have been told by landlords that they will be subject to legal measures from July, once the moratorium on aggressive debt enforcement ends. 

Almost one third (30%) say they have already faced County Court Judgements (CCJs) from commercial landlords. Furthermore, 80% of tenants said some landlords have given them less than a year to pay back rent arrears accrued during the pandemic.

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“Many retailers have taken a battering over the pandemic, but they are now getting back on their feet and playing their part in reinvigorating the economy,” said Helen Dickinson, chief executive of the British Retail Consortium.

“The unpaid rents accrued during the pandemic, when most shops were shut, are a £2.9bn ball and chain that hold back growth and investment and could result in a tsunami of closures.

“Government must ringfence the rent debts built up during the pandemic, giving retailers breathing space as they wait for footfall and cash flows to return.”

The Government introduced a Code of Practice last year to address the outstanding debt issues. Unfortunately, two thirds of those surveyed described the Code as ‘ineffective’ due to its voluntary nature. Government must give the Code greater weight and take other measures to support tenants and landlords.

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