Commercial landlords urged to switch to monthly rents

The British Retail Consortium (BRC) has called on commercial landlords to embrace modern payment methods and to agree to accepting rents a month, rather than a quarter, in advance.

The BRC has long been campaigning to persuade the owners of business and retail premises to base leases on monthly advance terms.

Traditional quarterly payments hark back hundreds of years to a time when horseback was the fastest method of transferring payments and, therefore, have no place in the modern age, the retail organisation has argued.

The issue of quarterly payments has been cast into even sharper relief by the current tough trading conditions, the BRC said, which have turned advance quarterly payments into an additional strain on already over-stretched cashflows for many businesses.

News that pension fund manager Hermes, a big commercial landlord, has agreed to substitute monthly for quarterly terms on existing leases was welcomed by the BRC as important progress.

The BRC’s two-year campaign has seen monthly terms becoming the norm on new and re-signed leases, but Hermes is the first major landlord to agree to renegotiate existing leases.

Stephen Robertson, the BRC’s director general, said: “As many retailers are confronted with next quarter’s huge up-front rents bill, Hermes’ announcement is a significant step forward for our campaign.

“A number of retailers have gone into administration this year. Others are clearly struggling. Most are battling a range of rising costs in order to keep shop prices and overall inflation down.”

Mr Robertson added: “The dam has burst. Hermes’ move shows there is no principled or practical reason why landlords cannot offer this flexibility. I urge all landlords to follow Hermes’ example. By agreeing to a fairer rents regime, landlords will be contributing to the retail prosperity on which they themselves depend.”

Date:29 September 2008