The retail market continues to struggle amid the ongoing economic strain experienced in the UK throughout 2023.
So far this year, there have been 2,302 store closures, as retailers suffer the hangover of the pandemic.
Together with the effects of inflation on materials and labour costs and rising business rates, many retailers are defaulting on their financial lease obligations and 31% of store closures this year have been from businesses which have gone into administration.
But what happens when a tenant becomes insolvent and how can landlords recover rental arrears owed to them?
Tom Horton, Senior Surveyor in our property asset management team, discusses the key considerations for landlords and the options available to them.
Landlords have faced a trio of challenging years when it comes to recovery of rental debt, having undergone a period rental concession throughout covid, to protect retailers.
Wherever possible, landlords tried to give rental concessions or restructure leases to base them on turnover rents in order to try to share the pain between landlord and tenant.
This undoubtedly helped retailers to limp through the pandemic, but many continue to struggle despite emerging from the other side of covid.
And it’s not just the smaller retailers who are affected, we have seen the demise of many a large retail company – from TM Lewin and Sofa Workshop to McColls and Debenhams.
When faced with tenants defaulting on their lease obligations, it is important to know, as a landlord, what options are available to you to recover rental arrears and limit your financial losses, as these can vary depending on the type of insolvency that your tenant experiences.
