As if the UK’s commercial landlords needed something else to worry about, they are now dealing with missed rental payments as a result of tenants going bust. Insolvencies are at a 13-year high in both England and Wales, putting the pressure on landlords who still need to pay their bills despite struggling to collect rents.
It is not a good situation right now. Unfortunately, things are not expected to get better for quite some time. Some experts are even talking about a worsening situation after the Christmas holidays. They expect things to deteriorate further as a result of people tightening their belts come the beginning of the new year.
Energy Prices Are a Big Problem
The Office of National Statistics says that more than 5,600 insolvencies were reported in England and Wales during Q2 2022. That is the highest number since Q3 2009. One possible reason is the end of government COVID support. But if that’s the case, what happens when the government ends support for energy in 2023?
Companies facing insolvency already say that energy prices are their biggest issue. Things are only going to get worse if government support ends as planned. That is a scary proposition, especially when you consider that as many as 10% of all UK businesses face a moderate-to-severe risk of insolvency.
A Cascading Effect for Landlords
Unfortunately, landlords are caught in the crossfire between poor economics and business insolvency. When economic conditions cause people to stop spending, the businesses they rent see a drop in revenues. If those revenues drop too fast and too far, tenants cannot pay their rent.
As a property owner yourself, you may be in the midst of this very scenario right now. You have first-hand experience trying to collect rent from tenants at severe risk of insolvency in the very near future.
You have heard all the excuses about why your tenants cannot make their rental payments. You have tried to be as gracious as you can in working with them. You have believed all the promises to get caught up, despite so many of them not coming to fruition. What is left for you to do?
It is a cascading effect of issues that could ultimately mean your demise as well. That’s something we don’t want to see. That’s why we are offering a solution: sell us your commercial property before its value falls any further.
We’ve Seen This Film Before
If the current state of UK economics and the commercial property market were a film, it would be one most of us could confidently say we’ve seen before. That is because national economies are cyclical. They rise and fall; they ebb and flow.
Unfortunately, we are now in the midst of a cyclical decline. We know from history what happens to property values during such declines. We even know how mass insolvencies create a cascading effect that harms landlords.
If we have learned anything from the past, it should be the lesson of taking a conservative approach to protecting one’s future. As a landlord, you have a lot of time, money, and effort wrapped up in your properties. You may be willing to ride out the current storm in hopes that you will rebound after the fact. But will you?
If you feel like there is even the slightest chance that growing insolvencies will jeopardise your business as a landlord, now might be the time to sell your commercial properties. Let us buy them; we will take the risk. You will walk away with cash in hand and less stress from dealing with insolvent tenants.