The British Retail Consortium (BRC) is demanding that landlords stop charging retails rents on a quarterly in advance basis because it is a practice that “belongs to the Middle Ages”
The overwhelming majority of shops pay their rent four times a year giving the landlord rent in advance. The practice dates back to a time when the horse was the only form of transport and landlords would send their agents out every three months to collect the money they were owed.
The BRC estimates that adds £145m per annum to the costs incurred by retailers. If the rent is subject to VAT the burden can be exacerbated by the fact that, if the timing of a VAT return does not coincide with rental payments, a retailer may have to “carry the VAT” before they can claim it back anything up to two months later.
Paying the rent monthly in advance would conform to standard business practice and the BRC is publishing a list of names of landlords who demonstrate flexibility over rental payments. The BRC suggests that a fairer rent regime would contribute to greater retail stability which is in the landlord’s own best interest.
BUSINESS FORUM COMMENT
Quarterly rental payments in advance are a particular problem for small independent shops where cash flow is often a problem. During the recession of the early 90s some landlords in Brighton did accept rent on a monthly basis as a personal concession to their tenants. But the time has come to make it the norm in all new leases.
The High Street is struggling to come to terms depressed consumer confidence and increasing utility bills and the independent sector – so important to Brighton & Hove – is a fragile niche that needs to be supported.
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British Retail Consortium