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Business lease terms should be more flexible

The British Retail Consortium (BRC) has re-iterated its call for more flexible lease terms in a week that saw many businesses facing large quarterly rent bills.

The BRC argued that the first quarterly rent payments day of the year will have been the toughest for almost two decades as retailers struggle with low levels of consumer spending and the ongoing recession.

Traditionally, many commercial landlords have demanded that rents be paid in advance, four times a year on the quarter days, a practice the BRC described as an anachronism, dating back centuries to the days when horseback was the fastest means of communication.

Instead, in an age of electronic bank transfers, the BRC wants landlords to substitute monthly for quarterly terms, a move that would help ease the cashflow problems of many businesses.

A long-running campaign by the BRC has helped to promote the shorter payment terms on new leases, but now the retail organisation is urging all landlords to show a willingness to switch existing leases to monthly terms, where that is what tenants want.

The importance of the issue to retailers can be gauged from the response to an online guide, produced by the BRC, offering advice on how to negotiate new terms with landlords.

Some 50,000 downloads of the guide have been made since the start of 2008, the BRC said.

Stephen Robertson, the BRC’s director general, commented: “A dismal Christmas for many retailers and following the year’s lowest spending months has meant the toughest quarter day since the early 1990s.

“A thriving retail sector is essential for the health of landlords and the wider UK economy. Boarded up shops are becoming commonplace. An unrealistic payments regime can only increase the pressure on hard-pressed retailers and the jobs they support.”

Mr Robertson added: “Some landlords have recognised this ancient anachronism is even more unjustifiable in the toughest trading conditions for years. I urge all landlords to show the same flexibility.”

Additionally, the BRC has called for the abolition of upward-only rent clauses, which allow landlords to increase rents each year regardless of economic conditions, and is asking the government to put an immediate freeze on all new business rates burdens.

The BRC ‘How to’ guide and template letters which retailers can use to approach their landlords about changing rent-payment terms are available at http://www.brc.org.uk/rentmonthly