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26 September 2008

Call for easing of commercial rent and lease conditions

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by Lin Freestone

Call for easing of commercial rent and lease conditions

The British Retail Consortium, together with a group of nearly 30 retailers, is urging commercial landlords to allow them to switch from quarterly to monthly rents to aid cashflow.

It is estimated that paying quarterly rental up-front costs retailers extra millions of pounds a year. Retailers complain that an alteration to the archaic practice is not just about rent, but it affects service charges and the length of leases too.

Historically, the practice of paying rents four times a year on quarter days dates back centuries. Retailers claim that monthly rents offered by landlords to companies in trouble, gives them an unfair advantage.

Hermes Pension Fund, which has 1,800 shops on its books, is offering to scrap existing lease terms and bring in more flexible conditions, including the offer of monthly rents.

A compromise with all landlords would be of great advantage to retailers at a time when they are being squeezed by rents, rates, service charges and utility bills rising well above inflation and shop prices that are actually falling.

Monthly payments would help struggling small retailers in particular by easing cash-flow pressures. By agreeing to a fairer rents regime, landlords will be contributing to the retail prosperity on which they, too, depend.

Meetings have been held with the British Property Federation in an attempt to resolve the situation.


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