If you are a property investor, who owns a shop, you have probably been thinking over the past few years, “Will my tenant be able to continue to pay me rent?”
Landlords rental income is in jeopardy and the future looks very bleak indeed.
Those of you who are landlords will receive your rent either monthly or quarterly in advance. Most tenants like to pay monthly as it is easier on their cash flow but most landlords prefer to receive their rent every three months. However you receive your rent, on the day it is supposed to arrive, nerves kick in as you are never sure if it will ever reach you.
Retailers today, whether they are national multiple chains with hundreds of shops in the UK or sole traders with only a single unit, are still struggling to run their businesses and pay their bills. If they are in trouble, and cannot pay their suppliers, they will not have any stock to sell. If they are in trouble and cannot afford to pay their staff, they will not have anyone in their shops to run their businesses. Therefore, when they are in trouble, it is always landlords who are the first to suffer.
Why is this? Well landlords are an easy target and the process which a landlord has to go through to recover rent is long, difficult and expensive. A supplier can simply stop delivering stock, a member of staff can simply stop coming to work, a utility company can simply cut off the electricty. However, a landlord must serve a rent demand, send reminders, take reasonable steps to recover the rent and then instruct a solicitor who may need to instruct a baliff or commence proceeding to forefit the lease or take action against the company or individual whose name appears on the lease. Whatever steps need to be taken to recover arrears of rent are very long winded which is why most landlords avoid them and seek to resolve matters directly with their tenants which in many cases results in the rent never being recovered. Landlords, who need this rental income, need to keep their tenants, even if they are having problems with the rent, as they know that if the tenants vacate the shops, they will find it virtually impossible to find new tenants. Therefore, landlords are having to agree to reduce all future payments of rent to make it easier on the tenants and to keep them in business. After all, a reduced rent is better than no rent at all.
Landlords rental income is in jeopardy and will continue to be as long as retailers continue to struggle, banks keep refusing to lend, inflation continues to rise, unemployment continues to rise and the public carry on avoiding spending on the high streets.