_Commercial rent collection: what do I need to know?
Commercial rent collection: what do I need to know?

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Farooq Rashid, Associate, Property Asset Management
What is The Commercial Rents Bill?
The Commercial Rents (Coronavirus) Bill gained royal assent in March, with the moratorium now ended and the next phase of quarterly rents due.
The law brings increased certainty and empowerment of landlords to the collection of protected rent arrears from tenants forced to close their doors during the pandemic. It aims to provide a framework for dispute resolution around unpaid rent arrears during the pandemic.
The Bill defines protected arrears and creates a process whereby landlords and tenants can refer their case to an arbitrator for resolution should negotiations to recover arrears fail.
What impact will the end of the moratorium have?
Although there has been significant improvement in rent collection since the disruption in 2020, the consistent shortfall throughout the past two years (which still exists across all property asset classes) means that the clarity which this milestone represents will alleviate some of the burdens landlords and property managers have been facing.
We are seeing an upward trend of things coming back to normality as far as rent collection. Knight Frank has been leading the sector, working with landlords and tenants to collect rents and service charges. The most challenging quarter was Q2 of 2020, when all landlords felt the true financial implications of the pandemic.
Certain sectors have remained more resilient than others throughout this challenging period, with retail and leisure landlords particularly affected by the challenges which recurring lockdowns posed for their tenants. However, we envisage that with a busy summer and the increased confidence that the threat of lockdowns has subsided. The potential threat to retailers now is the increased cost of living, and we will have to wait and see how this affects consumer behaviour.
Some questions remain:
- The arbitration process where those who have been in protected periods, how will independents manage to pay their quarterly rents on top of their payment plans?
- How much will it cost to arbitrate?
- Will landlords feel empowered to act against tenants?
What does the future hold?
The amount of rent commercial property landlords have collected from tenants has reached its highest level so far in the pandemic, as lockdown rules easing boosted businesses.
Collection will continue to return to some normality quarter by quarter but independent businesses will need to ensure that any agreed payments plans for protected debts are met alongside their upcoming rents, leading to an obvious strain on cash resources.
We expect that the whole of the sector will welcome the clarity that The Bill will bring, and simplify the process so that landlords and tenants can re-establish their usual symbiotic relationships.
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