Landlords stick with the old system
Dec 29 2009 by Henryk Zientek, Huddersfield Daily Examiner
DESPITE the impact of the recession, only a small minority of landlords are allowing retailers to switch to paying rents monthly rather than insisting on the “archaic” practice of quarterly payment up front, it is claimed.
A survey by the British Retail Consortium showed that just 12% of retail property leases are now on monthly rental terms – and nearly 90% of respondents who had been allowed to move to monthly terms said they had been or would be penalised with higher charges.
Two-fifths said if they had been allowed to move to monthly rents it was just on a temporary basis – typically a year.
The survey has been published in the run-up to the next “quarter day” in England and Wales on Christmas Day, when the quarterly rental payments are due.
The BRC said that thanks to its campaign over the past three years, monthly rents are much more common on new leases.
The survey found that since January, 2008, two-thirds of new leases have included monthly payment terms. But commercial landlords have a long way to go on showing this degree of flexibility on existing leases.
The BRC’s campaign predates the recession – with the retailers’ organisation arguing that quarterly rental terms are wrong in principle.
Said director-general Stephen Robertson: “It is an unjustifiable practice from an era when horseback was the fastest means of communication and has no place in the modern age.
“But this year, the impact of the recession has given the campaign a new urgency as the extra costs and cash flow effects of paying rents three months up front have become more significant.
“It’s been a tough year with many thousands of shops falling vacant. Helping out before that happens is in the interests of both landlords and retailers.”