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2/3 of retailers face legal action in July over £2.9bn in unpaid rents

// Covid-19 pandemic has left retailers with £2.9bn in accumulated rent debts, BRC says
// Two-thirds of retailers face legal action once the moratorium ends in July
// The BRC says that without action, the end of the moratorium could see thousands of shops close

Two-thirds of retailers face legal action once the rent moratorium ends in July, as the sector sits on £2.9 billion worth of unpaid rents, new research has shown.

At the end of June, the moratorium on aggressive debt collection from commercial landlords will end, which the BRC said would open up thousands of retailers to legal action.

With non-essential retailers closed due to lockdowns for eight of the last 15 months, many have accrued huge debts that they are only just beginning to be able to pay.

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According to the BRC, total rent debt is estimated to be £2.9 billion due to the Covid-19 pandemic.

The most recent BRC-Local Data Company Vacancy Monitor for the first quarter of the year showed that one in seven shops currently lie empty, and this number is expected to rise.

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

Almost one third (30 per cent) of retailers said they have already faced County Court Judgements (CCJs) from commercial landlords.

Furthermore, 80 perm cent of retailers said some landlords have given them less than a year to pay back rent arrears accrued during the pandemic.

The government introduced a Code of Practice last year to address the outstanding debt issues, but the BRC said that two thirds of retailers surveyed described the Code as “ineffective” due to its voluntary nature.

The retail lobby group urged the government to give the code greater weight and take other measures to support tenants and landlords.

To resolve the rent debt in “a fair and equitable manner”, the BRC suggested that the government ringfence the rent arrears built up during the pandemic and extend the moratorium on repayment of these debts to the end of the year.

It also suggested to extend the protections on these debts to include CCCJs, and to introduce compulsory arbitration from January 1 next year using the Code of Practice to give teeth to this “otherwise weak process”.

The BRC said that without action, and where agreement between landlords and retailers cannot be reached by July 1, thousands of shops will be at risk of shutting down.

“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,” BRC chief executive Helen Dickinson said.

“The unpaid rents accrued during the pandemic, when most shops were shut, are a £2.9 billion 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.

“With this in place, all parties can work on a sustainable long-term solution, one that shares the pain wrought by the pandemic more equally between landlords and tenants.

“Without action, it will be our city centres, our high streets and our shopping centres that suffer the consequences, holding back the wider economic recovery.”

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