UK rent collection for June Quarter climbs to 68%

Re-Leased, the cloud-based commercial property management platform, has published its latest figures for the June Quarter. The new figures analyse rent collection 60-days after commercial rents were due on the 24th June and provide an indication of what to expect for the upcoming September Quarter.

The data reveals that by day 60 (24th August), commercial tenants in the UK had paid 68% of rent, up from 18.2% on the due date, and +1% compared to the same point in the rent cycle for the March quarter. However, June was still -16% compared to day 60 in the December Quarter, which saw 84% of rent collected.

Re-Leased’s latest figures confirm that each sector has marginally improved compared to the previous quarter. The retail sector continues to be the hardest hit, receiving just 60% of rents due, while the industrial and office sectors are performing significantly better at 75% and 76% respectively.

UK Average and Asset Breakdown

Total % of rent collected  (as of day 60) Dec Qtr 2019 Mar Qtr 2020 Jun Qtr 2020
UK – all commercial* 84% 67% 68%
Retail 84% 59% 60%
Office 81% 74% 76%
Industrial 90% 74% 75%

*Includes other asset classes with smaller sample sizes (e.g. leisure)

Tom Wallace, Re-Leased’s CEO, commented:

“Over the course of the June quarter, rent collection climbed from a sobering 18.2% on due date to 68% by day 60, which is on par with March Quarter’s performance. Though unlike March – where organisations would have been operating as normal for the majority of the first quarter of the year – businesses across the UK felt the full force of lockdown measures for June. On one hand this shows there is a degree of resilience in the market, however, the shortfall in income for landlords over both quarters should not be underestimated. This is a substantial level of debt that runs into the billions, placing huge pressure on landlords.”

“All eyes are now on 29th September and what the next quarter will bring. With new restrictions for businesses announced on the 22nd of Sep by government and the extension of the rent moratorium the week prior, there is a strong suggestion that the improvement in rent collections may not come to fruition. As a consequence, we predict very similar rental collection figures to the prior two quarters.”

The British Property Federation estimates total rent unpaid for UK commercial property between late March and the end of December will be around £4.5 billion.

Re-Leased’s data for the June quarter also shows that credit notes have almost tripled, highlighting where tenants have already made agreements for rent free periods. These stand at 4.7%, up from 1.7% in December.

UK Average and Asset Breakdown

Total Credited (as of day 60) Dec Qtr 2019 Mar Qtr 2020 Jun Qtr 2020
UK – all commercial* 1.7% 2.7% 4.7%
Retail 1.2% 2.8% 4.4%
Office 2.3% 1.7% 4.1%
Industrial 2.6% 5.3% 7.7%

*Includes other asset classes with smaller sample sizes (e.g. leisure)

Wallace continued, “We have been very encouraged by landlords’ efforts to support their tenants during the last 6-months, offering rent holidays, deferrals, and reductions where possible. It is crucial that tenants who can afford to pay some or all of their rent for the September Quarter do so. For those who are genuinely struggling, transparency is key. Landlords have their own financial obligations to meet and will be navigating significant cash flow problems.”

Re-Leased’s analysis is based on live rental collection data from over 10,000 commercial properties and 35,000 leases on its UK platform.