15 April 2024, 09:29
By Furniture News May 30, 2021

Two thirds of retailers face legal action over rents, says BRC

In exactly one month (30th June 2021), the moratorium on aggressive debt collection from commercial landlords will end, opening up thousands of retailers to legal action, reports the British Retail Consortium (BRC). 

With many retailers closed for large periods during the last 15 months, many have accrued huge debts that they are only just beginning to be able to pay – total rent debt is estimated to be £2.9b. Already, one in seven shops lie empty (according to the BRC-LDC Vacancy Monitor, Q1 2021), 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. 

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. The BRC believes that the Government must give the code greater weight and take other measures to support tenants and landlords, and that Government must take steps to resolve the rent debt in a fair and equitable manner, by: ringfencing the rent arrears built up during the pandemic and extending the moratorium on repayment of these debts to the end of the year; extending the protections on these debts to include County Court Judgements (CCJs); and introducing compulsory arbitration from 1st January 2022 using the Code of Practice, to give teeth to this "otherwise weak process".

Retailers are running out of time to save their businesses, says the BRC. Where agreement cannot be reached by 1st July between retailers and landlords, many shops will find themselves unable to maintain their presence on high streets, shopping centres and retail parks.

BRC chief executive Helen Dickinson says: “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, when most shops were shut, are a £2.9b 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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