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Commercial landlords struggling with debts, but defaults unlikely says study

Defaults on commercial property debt are likely to rise significantly according to a University of London Business School study. The University’s survey found that loans either in default or in breach of one or more terms has reached 8.6% of all outstanding loans.

UK landlords have been temporarily banned from evicting commercial tenants who are in default. When tenants have failed to pay their rent, or failed to pay on time, since the coronavirus pandemic began, the government has imposed restrictions on landlords taking tenants to court or on evictions.

This has hit landlord owners in the retail and hospitality sector particularly hard and it has in turn spurred the decline in retail store values, resulting in some companies breaching their loan agreements by default. As the 30th of June arrives, many commercial landlords in England are expecting to breathe a sigh of relief as they should be in a position to reassert some authority over their non-paying tenants.

However, their troubles may not be over yet as many tenants will be unable to pay in full in the short term and the government is currently seeking views on possible next steps to be taken to ease the way out of the crisis for struggling tenants.  

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