Revo chief executive warns of £2bn retail rent blackhole

The chief executive of Revo, Vivienne King, which represents landlords and retailers, warned that property owners were still owed £1.5bn in unpaid rent from the first and second quarters of the year. 

She warned that if retailers paid less than 50% of rents due for the third quarter, as was the case earlier in the year, that blackhole would blow out to beyond £2bn and would lead to “material impacts” on landlords’ access to borrowing facilities. 

“Retail property owners are braced for another hugely damaging quarter with fears that once again less than 50% of rent due will be paid by operators whatever their balance sheets, adding to the total £1.5 bn of rent unpaid at the first and second quarters.

“The government’s decision to extend the moratoria has simply fuelled the confidence of the well-heeled to continue exploitation of a system intended to protect businesses in genuine distress. There is little justice in singling out property owners as the fall guys to indiscriminately compensate large and valuable operators for their cashflow. But having done so, the repercussions will reverberate through the economy for years to come as the capital for regeneration dries up, investors look to safer havens elsewhere and anyone who has put their savings into retail property faces huge losses.

“Moreover, with the rental shortfall in the retail sector alone set to exceed £2 billion, the stress may begin to have material impacts on credit supply if lenders find themselves overwhelmed by defaulting borrowers.”

King also criticised the government’s decision to extend the moratorium on evictions beyond the end of the year, saying it threatened to ruin the UK’s international reputation for “stable rule of law” and, by extension, international investment.

“The moratoria, like the furlough scheme, were a short term emergency measure introduced at the start of lockdown, but nine months is looking very much like long term. The UK is respected worldwide for its stable rule of law but by continuing to allow contractual arrangements to be ignored in one sector, the government is casting doubt on the reliability of our legal system more broadly.

The perfect storm of the moratoria, abuse of CVAs and an archaic business rates system are making UK town and city centres uninvestable. The current policy is short-termist; while it may protect some jobs temporarily it will severely undermine job creation in the longer term in deterring investment and innovation on the high street.“

“It is imperative the government acknowledges the potential long-term consequences of this short-sighted policy, and puts its weight behind restoring contractual relationships which enable property owners and retailers to begin to plan sustainably for the future.”

Revo’s chief executive has warned of the consequences of retailers not paying rents, saying landlords are facing a £2bn arrears blackhole that will have knock-on effects across the industry.