Two-thirds of huge retailers count on to face authorized motion from their landlords when a suspension of aggressive debt assortment ends in June, a survey says.
Many outlets have been shut for lengthy durations in lockdown, accruing £2.9bn in rental arrears, the British Retail Consortium mentioned.
The BRC mentioned a rush to gather might result in a “tsunami of closures” and urged the federal government to behave.
The federal government mentioned it’s contemplating the way it will help corporations with lease points.
The federal government launched a code of apply final yr to deal with the excellent debt points. It additionally put curbs on aggressive debt assortment practices till 30 June.
However of the 24 main retailers surveyed – who account for greater than 5,000 UK shops – two-thirds described the code as “ineffective” as a result of it was voluntary.
The same proportion mentioned they confronted authorized motion towards at the very least considered one of their shops when the suspension ends.
Moreover, 80% of tenants mentioned some landlords have given them lower than a yr to pay again lease arrears accrued through the pandemic.
BRC boss Helen Dickinson mentioned: “Many retailers have taken a battering over the pandemic, however they’re now getting again on their toes and taking part in their half in reinvigorating the financial system.
“The unpaid rents accrued through the pandemic… are a £2.9bn ball and chain that maintain again progress and funding and will end in a tsunami of closures.
“Authorities should ringfence the lease money owed constructed up through the pandemic, giving retailers respiratory area as they await footfall and money flows to return.
“With this in place, all events can work on a sustainable long-term answer, one which shares the ache wrought by the pandemic extra equally between landlords and tenants.”
Already, one in seven outlets lie empty, with this quantity anticipated to rise, BRC analysis suggests.
However the British Property Federation, which represents business landlords, performed down the findings saying most landlords and tenants had already reached agreements on lease.
In April the federal government launched a “name for proof” to assist monitor the progress of negotiations between tenants and landlords.
It additionally sought views on steps it might take after 30 June, starting from a phased withdrawal of present protections to legislative choices focused at companies most impacted by Covid.
A enterprise division spokesman mentioned: “The federal government is contemplating responses to a name for proof on business rents and the right way to finest to help companies; an announcement on subsequent steps might be made sooner or later.”