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News - 11 November 2004
John Clare of Dixons - not happy!

Dixons boss blasts landlords

John Clare – CEO of Dixons – stunned landlords and property developers at the BCSC Conference in Manchester when he told them to “play fair or risk failure” over rents and lease terms

Clare did not mince his words when he said that landlords must meet the obligations of the voluntary code of practice agreed by the industry in 2002 to stave off government legislation. He not only suggested that the government would revisit legislation that was likely to be far more onerous than the voluntary code but he also warned that retailers would withdraw from rented property in the high street.

The voluntary code contains a raft of agreements covering 23 aspects of leases but the two major planks are the removal of “upward only” rent reviews and introducing flexibility by cutting the length of the lease (see earlier stories in Knowledgbase). Clare was scathing about the industry’s attitude to the code saying that, two years after its introduction 90% of new leases ignored its provisions.

In his view this led to town centre retailing becoming unaffordable to increasing numbers of companies which results in high streets losing their vitality and diversity and being dominated by mobile phone shops and coffee houses. He confirmed that Dixons, having recently closed over 100 stores, was likely to stay away from prime high street locations.

None of the landlords at the conference challenged his view in the subsequent Q&A session but Martin Moore from PruPim disputed some of Clare’s claims in his own presentation to the conference insisting that 75% of leases taken by SMEs are for terms of five years or less and, as such, are not subject to rent reviews. At the end of a lease the tenant has the option to walk away (assuming that they have fulfilled all their obligations) or negotiate new terms.

There has always been an “us and them” attitude between landlords and tenants and it seems that when big players like Dixons publicly join the fray the friction is likely to continue while the government decides whether legislation is needed to give the code of practice more teeth.

Read related items on:
Retail, pubs, clubs and restaurants
Clare, John
Moore, Martin

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