Only 48% of tenants paid on time and in full on the last rental day, which for commercial tenants was March 25 and which varies for residential contracts, according to data compiled by Remit Consulting of six major property management companies covering nearly 80,000 leases. .
With stores and offices closed and thousands of employees vacationing across the country, many decided to keep cash rather than pay rent, a decision that sparked conflicts between landlords and tenants in Canada. over the past two weeks.
Retail owners, whose tenants were mostly forced to close due to the pandemic, took 41% of the rents. Homeowners are doing a little better, taking 44% of what is owed to them.
“These numbers are likely to make reading uncomfortable for owners, asset managers and investors,” said Steph Yates, senior consultant at Remit Consulting.
Even office tenants, who are under less pressure than retailers or hoteliers, paid only 57% of the total owed. In 2019, 79% of rents in all sectors were received on time, reaching 90% a week later. After a week, the 2020 figure was still only 57%.
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The rapid spread of the coronavirus has caught tenants and landlords off guard and has created confusion, and in some cases conflict, over what is due and when. Commercial and residential tenants were protected from eviction until June by government intervention, although they are contractually required to pay their rent.
But many tenants, particularly business owners forced to close their stores and residential tenants whose jobs have dried up, have simply been unable to pay.
The landlords were encouraged to find accommodation with these tenants and generally offered rent deferrals, changes to payment schedules or rental leave.
But some complain that tenants able to pay exploit the situation to avoid doing so.
” There are some [commercial] tenants seeking to take advantage of the current situation. . . use this as an opportunity to negotiate a better position and lower rent, “said Angela Kearns, partner in real estate practice with law firm Clifford Chance.
Some commercial owners have refused to offer concessions to tenants, rather threatening to bring them to justice if they don’t pay. Criterion Capital, owner of the Trocadero center in London’s West End, has written to tenants demanding full payment, which it said it needed to fulfill its own obligations to lenders.
He only targeted companies in his estate with balance sheets strong enough to pay, “but chose to openly use the government bill for the coronavirus as an excuse to withhold payment of the rent,” he said.