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Unhappy Feast Day

Today, 25 March, is the Feast of the Annunciation. It is also a Quarter Day, when the rent must be paid. The British Retail Consortium is calling on the property industry to end the historic practice of quarterly rents.

Paying rent quarterly and in advance costs tenants millions of pounds every year and puts enormous pressure on cash flow – particularly for smaller businesses.

The British Retail Consortium describes itself as the lead trade association representing the whole range of retailers, from the large multiples and department stores through to independents, selling a wide selection of products through centre of town, out of town, rural and virtual stores. On its website, it explains that

“For the retail sector property plays a key role in many respects. The occupation of physical property is crucial for retailers because whatever e-commerce may bring, it is unlikely to fundamentally change the need for most retailers to have a physical presence on the high street. Retailers are heavily dependent on property and because of this the industry is highly exposed to the inflexibility and high costs associated with occupying commercial property in the UK.

“Property costs are the second biggest cost for retailers after wages and are currently rising much faster than sales growth. High rents as a result of upward only rent reviews and other inflexible leasing practices are making it increasingly difficult for multiple retailers to continue trading on the high street. For small independent retailers who are rarely in a strong position when negotiating with a property owner over the terms of a new lease, the cost of securing a foothold on the high street is often prohibitive.

“Policies that make property investment and development less viable, or the occupation of property more inflexible and expensive for retailers will also have widespread economic and social implications.”

And economists tell us that land doesn’t matter any more.