Administration fears over quarterly rents
Article Date: Mar 25 2009Businesses are facing the toughest quarterly rents payments day in 18 years, warns the British Retail Consortium (BRC).
As many commercial landlords will be demanding hundreds of millions of pounds in quarterly rent payments today, the group is calling for existing leases to be changed to monthly terms.
Stephen Robertson, BRC director general, says: ‘A dismal Christmas for many retailers followed by the year’s lowest months of spending, has meant this will be the toughest quarter day since the early 1990s.
‘Boarded up shops are becoming commonplace. An unrealistic payments regime can only increase the pressure on hard-pressed retailers and the jobs they support.’
Martin Meech, group property director at building supplier Travis Perkins, says monthly payments will help businesses to ease cash flow.
He adds: ‘Over the last 12 months we’ve spoken to all our landlords about moving from quarterly rent payments to monthly ones. We’ve had a 20 per cent success rate with existing leases and a 98 per cent success rate with new leases. Companies should negotiate with them as they are starting to become more flexible.’
Malcolm Cohen, business restructuring partner at BDO Stoy Hayward, says that this quarterly rent bill may force a significant number of businesses into administration as the financial pressure becomes too much.
The BRC is also calling for the abolition of upward-only rent review clauses, which allow landlords to increase rents each year regardless of economic conditions, and is asking the government to put an immediate freeze on all new business rates burdens.
Travis Perkins’ Meech adds: ‘In the last 15 years we’ve seen rents increase to reflect growth; now things have gone south they’re no longer in line with the general economy. When our rents are up for renewal, we intend to renegotiate the price.’
According to credit referencing agency Experian, by the end of this year 140,000 shops will be vacant and 200,000 retail jobs will have been lost.
