Retailers' campaign for monthly rents gains momentum

The British Retail Consortium has urged landlords to offer monthly rents to all retailers, as the campaign to switch from quarterly rental payments in advance to monthly transactions gathers pace.

In a letter sent to the British Property Federation (BPF) chief executive Liz Peace on Wednesday, BRC director general Stephen Robertson also requests a high-level summit between BRC and BPF members before the next quarterly payment date on 29 September.

Some of the UK's biggest store groups, including Sir Philip Green's Arcadia, Boots, Carphone Warehouse and DSGi, have backed this summer's renewed campaign to demand monthly rents, as trading conditions on the high street deteriorate.

In the letter, Mr Robertson said: "I believe that monthly rents should not be offered solely to retailers as a result of their financial position, but as standard practice where this fits with an occupier's business practices."

While leading retail chains such as Next and B&Q, have had significant success in securing a switch to monthly rents on new and renewed leases, retailers with less stellar balance sheets have been less successful.

Edward Cooke, the BRC's property policy adviser, said: "Some BRC members have been successful in securing monthly rents on over 90 per cent of new and renewed leases over the past two years." Mr Cooke said that while landlords should be commended for their flex-ibility, "more could, and should, be done".

Last week, Next's chief executive, Simon Wolfson, told The Independent that rents paid monthly now account for 11 per cent of his company's total annual cash payments for rent.

A BPF spokesman said: "We have been working with the BRC over the last two years and across the board landlords are being more flexible in terms of the packages they offer retailers."

Retailers and landlords are also locking horns over "upwards only" rent reviews. B&Q's property director Terry Hartwell cited a recent case at a store in Rotherham, when despite the arbitrator awarding a lower rent per square foot than the retailer currently pays, the rent will remain unchanged because of an "upwards only" rent review clause in the lease.

Mr Hartwell said that in most of B&Q's 17 rent reviews since last year a "nil uplift" has been agreed: "Some landlords are still refusing to face reality, however the enlightened ones are now settling for a nil increase by negotiation rather than having a lower rent stipulated by an arbitrator."

System dates back to Middle Ages

The system of retailers paying landlords commercial rents a quarter in advance dates back to the Middle Ages. In English law, the quarter days were the four dates in each year on which servants were hired, and rents and rates were due. The dates were taken from the Christian holy days and today retailers still pay their rents on 25 March or Lady Day; Midsummer's Day on 24 June; Michaelmas on 29 September; Christmas Day, 25 December. Retailers often use this to illustrate the anachronism of quarterly payments, but property industry sources say that, while they are being more flexible with retailers, in no other industry would the idea of a ripping up an existing commercial agreement be contemplated.

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