Retailers face ‘tsunami of closures’ over unpaid rent

One in seven shops lie empty, BRC research suggests

Two-thirds of big retailers expect to face legal action from their landlords when a suspension of aggressive debt collection ends in June, a survey says.

Many shops have been shut for long periods in lockdown, accruing £2.9bn in rental arrears, the British Retail Consortium said.

The BRC said a rush to collect could lead to a “tsunami of closures” and urged the government to act.

The government said it is considering how it can help firms with rent issues.

The government introduced a code of practice last year to address the outstanding debt issues. It also put curbs on aggressive debt collection practices until 30 June.

But of the 24 major retailers surveyed – who account for more than 5,000 UK stores – two-thirds described the code as “ineffective” because it was voluntary.

A high street

People were able to return to non-essential shops in England from 12 April

A similar proportion said they faced legal action against at least one of their stores when the suspension ends.

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

BRC boss Helen Dickinson said: “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.

“The unpaid rents accrued during the pandemic… 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.

“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.”

Already, one in seven shops lie empty, with this number expected to rise, BRC research suggests.

But the British Property Federation, which represents commercial landlords, played down the findings saying most landlords and tenants had already reached agreements on rent.

In April the government launched a “call for evidence” to help monitor the progress of negotiations between tenants and landlords.

It also sought views on steps it could take after 30 June, ranging from a phased withdrawal of current protections to legislative options targeted at businesses most impacted by Covid.

A business department spokesman said: “The government is considering responses to a call for evidence on commercial rents and how to best to support businesses; an announcement on next steps will be made in due course.”