Two thirds of UK retailers could face legal action in July when the moratorium on debt collection from commercial landlords ends, according to the British Retail Consortium (BRC.)

The trade association said that with many shops closed for large periods over the past 15 months, many have accumulated huge debts that they are only just beginning to be able to pay.

The consortium estimates total rent debt of £2.9 billion.

A new survey from the BRC demonstrates that 75 per cent of retails have been told by landlords that they will be subject to legal measures from July.

A further 30 per cent said they have already faced county court judgments from commercial landlords.

80 per cent of tenants said some landlords have given them less than a year to pay back rent arrears accrued during the pandemic.

Last year the government introduced a code of practice to address the outstanding debt issues.

But two thirds of respondents from the BRC study said that the code is ineffective because of its voluntary nature.

The organisation has urged the government to ringfence the rent arrears built up during the pandemic and extend the moratorium on repayment of these debts to the end of the year, extend the protections on these debts to include county court judgements, and introduce compulsory arbitration from January 1st 2022 using the code.

It warned that where agreement cannot be reached by 1st July between retailers and landlords, many stores will no longer be able to maintain their presence on High Streets, Shopping Centres, and Retail Parks.

“Many retailers have taken a battering over the pandemic, but they are now getting back on their feet and playing their part in reinvigorating the economy,” said Helen Dickinson, chief executive, BRC. “The unpaid rents accrued during the pandemic, when most shops were shut, are a £2.9 billion ball and chain that hold back growth and investment and could result in a tsunami of closures.”

Dickinson added: “Government must ringfence the rent debts built up during the pandemic, giving retailers breathing space as they wait for footfall and cash flows to return. With this in place, all parties can work on a sustainable long-term solution, one that shares the pain wrought by the pandemic more equally between landlords and tenants. Without action, it will be our city centres, our high streets and our shopping centres that suffer the consequences, holding back the wider economic recovery.”

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