The British Retail Consortium (BRC) has been campaigning for the past few years to try to encourage more commercial landlords to accept monthly rental payment arrangements instead of the quarterly payments commonly used. Although the BRC began pushing for changes to the way retailers pay landlords before the recession, it has become an even more significant issue as many businesses are struggling to make ends meet.
The BRC has had some success in persuading more landlords to accept monthly rather than quarterly payments of rent by retailers. According to the BRC’s Monthly Rents Survey, since January 2008 two thirds of new leases contain monthly payment terms. However, a BRC survey carried out at the end of last year showed that only 12 per cent of retail leases are on a monthly payment basis and 40 per cent of these are for a temporary period only, for example permitting the retailer to pay monthly for one year only. It was also found that 90 per cent of those who had switched to monthly payments had been, or would be, subject to extra charges.
Although the BRC’s campaign has made good progress as regards new leases, there is still a long way to go to convince landlords to accept monthly payment terms on existing leases without penalising those retailers who switch to this type of payment plan. As economic uncertainty continues to impact on businesses, it benefits both landlords and retailers to keep shops open where possible, rather than have empty premises. This can be more easily achieved if retailers do not have to find the funds to pay their rent three months in advance.