Landlords mull legal action against retailers as rent slumps to new lows

Retail Week understands that a number of retail property landlords are actively exploring legal action against retail businesses, including the likes of JD Sports and Boots, which they see as taking advantage of the government’s moratorium on evictions. 

While certainly not the only retailers in arrears, it has been widely reported that Boots has refused to pay for the first or second quarters of this year.

JD Sports chief executive Peter Cowgill has made no secret of the fact he feels its store estate “has to be repriced and that has to be recognised by bondholders and the financiers of shopping centres.”

A retail property source said landlords were exploring options “against those names mentioned and others”, before adding: “Those that can afford to pay and haven’t, what I’m hearing from most landlords is that they’re the people they’ll take the hardest lines with. Both when the moratorium lifts but also in terms of what court action they can take today.”

While the moratorium has stopped landlords from pursuing tenants with forfeiture or Commercial Rent Arrears Recovery claims for non-payment of rents until the end of the year, there are some avenues still open to them such as bringing debt claims or enforcement of available security. 

The source continued: “Landlords are continuing to try and rattle their cages by writing letters to them – whether that’s directly or through solicitors – to say ‘pay up, it’s due’. Ultimately, those are the guys that will get the shortest shrift when it comes out the other side and the moratorium does fall away.”

This comes after yesterday’s September rent day fell due. Data published today by commercial property management platform Re-Leased said just 12.7% of retail rents were paid yesterday, down from the rent day in June. 

On June 24, retailers paid less than 20% on the day and the figure reached 68% of all rents paid as of today. 

Property membership organisations such as Revo and the British Property Federation (BPF) have repeatedly warned of the danger of the growing debt pile of rents in arrears payments that have been building since March.

BPF chief executive Melanie Leech predicted that by December, the commercial rent arrears debt pile will have more risen from £3bn currently to £4.5bn. 

“It is disappointing to see the total shortfall in unpaid commercial rents has simply doubled over the past two quarters,” she said. 

“While, for many, recovery is still at risk and more support will be vital, we continue to see well-capitalised businesses taking advantage of government interventions and refusing to pay rent. All signals are pointing towards a total of £4.5bn in unpaid rents by the end of December, which is too high a mountain for businesses and property owners to climb on their own.”

Revo chief executive Vivienne King said yesterday retail businesses were responsible for £2bn of that debt and added today: “The situation is getting worse with every day the moratoriums remain in place as the debt will continue to mount. Just as other government measures wind down, we need clarity on how we are going to transition out of this current distorted situation to normal market operations, allowing property owners and retailers to work together constructively within their contractual arrangements to navigate this crisis.”