With the June Quarter Day in England looming, the industry speculated on the ability of landlords to collect the rents that would become due. Many occupiers had been closed for business during the preceding quarter. As such, could the Scottish May Quarter Day results provide a clue as to what could be expected?

As the timing of rent obligations is different in Scotland (with quarterly rents typically falling due either the 15th or 28th May), we reviewed the collection rates as an indicator of what could happen at the forthcoming June Quarter. These reflected the fact that many payment arrangements had already been agreed upon, which resulted in the phased payment of sums due.

Early indications: Positive results

Seven days after the May 28th due date, the progress was encouraging. The Scottish Quarter Day results showed an average of 53% for rent collection and around 51% for service charge, demonstrating better results than the 15th May due date. This could have been attributed to occupiers becoming more engaged as lockdown eased, allowing for a greater focus on business operations.

Performance by sector

Rent collection on industrial assets at Day 7 reached 65%, with service charge collection at 52%. In comparison, the office sector showed almost the reverse. Rent collection stood at 57%, while service charge recovered was at 63%.

Although office service charges were higher in comparison, office occupiers appeared to have a greater focus on ensuring that common areas were fully operational for their staff to return to work.

The Retail and Leisure sector had been one of the hardest-hit during the pandemic. Many operators had already agreed on payment arrangements to reflect the lockdown. Despite this, achieving 30% of rent and 38% service charge collected at Day 7 was still a notable result.

The legal remedy

It’s worth remembering that Scotland has a separate legal system and was subject to a separate moratorium on arrears recovery.

Ordinarily, there is a 14-day period for tenants to satisfy a charge for payment. If the tenant failed to make the payment, the landlord could take further action to terminate the lease. Additionally, the landlord may pursue the debt through other means. This extension had a significant impact on a landlord’s ability to pursue arrears.

Maintaining occupier engagement is crucial

The results seen here were a great credit to Workman’s Credit Control and Property Management teams. They worked tirelessly in advance of the Quarter Days, ensuring that occupiers remained engaged and aware of the landlords’ expectations.

We continued to work closely with clients to ensure that the strategy was clear and in place to resolve any issues as they arose  without delay.

By Jim Hallan, Partner