Two-thirds of UK retailers face legal action in July over unpaid rent

Two-thirds of retailers in the UK face legal action in July when the moratorium on aggressive debt collection from commercial landlords ends, new research shows.

Almost one third (30 percent) of retailers say they have already faced County Court Judgements (CCJs) from commercial landlords, while 60 percent of landlords have given tenants less than a year to pay back rent arrears accrued during the pandemic.

That’s according to a survey of retailers conducted by the British Retail Consortium (BRC).

It comes as retailers across the UK have faced a tough period of prolonged store closures over the past 15 months, during which their accumulative rent debt pile has risen to an estimated 2.9 billion pounds.

The Government introduced a Code of Practice last year to address the outstanding debt issues. However, BRC’s survey found two-thirds of retailers described the Code as ‘ineffective’ due to its voluntary nature.

More stores could face closure

The BRC warned that without action, the end of the moratorium next month could see thousands of shops close, inflicting yet another blow to an already struggling industry.

It suggested the government should ringfence the rent arrears built up during the pandemic and extend the moratorium on repayment of these debts to the end of the year; extend the protections on the debts to include County Court Judgements (CCJs); and introduce compulsory arbitration from January 1 2022 using the Code of Practice.

Helen Dickinson, the CEO of BRC, said in a release: “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 2.9 billion pound ball and chain that hold back growth and investment and could result in a tsunami of closures.”

According to the most recent BRC-LDC Vacancy Monitor published in May, there are around 5,000 fewer stores in the UK since the start of the pandemic, meaning one in seven shops now lie empty.

Dickinson continued: “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.”