viewpoint
Published: 28 August, 2008
The retail lobby is ratcheting up the pressure on landlords over the time-honoured tradition of paying rent quarterly in advance. Detecting signs of weakness in a property industry ravaged by the credit crunch, they are wheeling out the big guns like Sir Philip Green and Lord Harris to push for an agreement ahead of the September quarter day.
Just because something is a time-honoured tradition doesn't mean it shouldn't be changed: bear baiting and sending small boys up chimneys were once well-loved pursuits. But in this case there are very good reasons why landlords shouldn't give way.
First is the fact that amending the terms of existing leases would open up a whole can of worms. The retailers were advised by very expensive lawyers when they signed up to pay quarterly in advance. And nobody has ever been forced to sign a lease they didn't like. So to retrospectively move the goalposts on this issue might only encourage them to push for more concessions next time they detect weakness among the landlords. And the second point is that retailers are absolutely rapacious when it comes to their contracts with their own suppliers - unilaterally changing payment terms and imposing surcharges just to protect their own cashflow. Until now the supplier of property has been the one supplier that enjoys legal protection from this sort of behaviour, and landlords give up this status at their peril.
Of course it's in a centre owner's interest to help out a retailer that's struggling, and many already do this. But there's no justification for an industry-wide change, which would represent a serious shift in the landlord/tenant relationship.
Graham Parker, Editor
