There was a spread of views but – as you’d expect from a magazine whose readers are primarily retailers – the main sentiment expressed was frustration that landlords have refused to compromise and accede to requests from retailers to pay their rent monthly rather than quarterly. You can read a selection of readers views in Friday’s Retail Week.
You can also read a very angry letter from the chief executive of the British Property Federation, the body that represents property owners. She is insistent that her members are more than happy to consider requests to pay rent quarterly and says that even the BRC – which ran a campaign of its own on this issue two years ago – agrees that landlords are now much more accommodating.
But if this is the case, why have 20-odd top retailers joined together to protest against the practice? And why have we been bombarded with letter from retailers saying that landlords aren’t backing up the rhetoric with actions?
Part of the answer is in the detail. While monthly payments may indeed be an option on new leases, landlords are extremely reluctant to accept a change in payment terms during the period of a lease. This is to a degree understandable – after all, if a tenant signs a deal why should it be allowed to change the terms halfway through – but neglects the fact that retail leases in prime locations are still usually 10 or 15 years longand that retail is going through its most severe downturn for two decades.
There is also an suggestion that retailers should be expected to pay for the privilege of paying rents on the same basis as they pay for anything else.
Take this quote from British Land on the BPF’s press release, designed to show how accommodating landlords are: “On any new leases, British Land is very happy to consider monthly payments as part of the entire commercial transaction, in the same way that we review rental levels, lease lengths, rent free periods etc.”
That’s not good enough. Rental levels, lease lengths and rent-free periods are commercial elements of a deal. The timing of payments is not – it’s purely about administration because it has no effect on the value of the property. Landlords have made big strides forward in recent years, but the complains of retailers show there is still more to do.