BRC: Two-thirds of retailers face legal action in July over rents

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In exactly four weeks (June 30), the moratorium on aggressive debt collection from commercial landlords will end, opening up thousands of retailers to legal action.

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 £2.9 billion and already, one in seven shops lie empty with this number expected to rise.

A new survey of retailers by the BRC showed 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 British Retail Consortium said the Government must take steps to resolve the rent debt in a fair and equitable manner.

Helen Dickinson, chief executive of the British Retail Consortium, 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, when most shops were shut, 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.

“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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