Call to change method of retail rent payments
The British Retail Consortium (BRC) is urging landlords to accept rents monthly rather than quarterly in advance.
The BRC estimates that the traditional method of paying rent three months in advance is costing retailers some £145 million a year in extra borrowing costs and cashflow pressures, 1 per cent of the total £14.5 billion annual rental bill.
The BRC has been conducting a two-year campaign to make monthly terms the norm on new and re-signed leases.
However, the downturn in consumer spending is adding to the difficulties of those retailers still on quarterly agreements, the BRC said.
With Arcadia owner Sir Philip Green and Lord Harris, Chairman of Carpetright, among those now calling for landlords to move towards monthly payments in advance, the retailers’ organisation said that extra impetus has been given to its campaign for greater flexibility, even on existing leases, where that is what businesses want.
Stephen Robertson, the BRC’s director general, commented: “At a time when retailers are battling a range of rising costs in order to keep shop prices and overall inflation down, the new momentum given to rents reform by some of UK retailing’s key figures is welcome.”
Mr Robertson described requiring rents three months in advance as at odds with standard business practice and rooted in the days when communications were governed by the speed of a horse.
He added: “So far this year a number of retailers have gone into administration. Seeing retailers driven to the wall is on no-one’s interest. By agreeing to a fairer rents regime, landlords will be contributing to the retail prosperity on which they themselves depend.”