Monday 7 November 2011

Shops offered £1 rents on high-vacancy streets

With vacant shops increasing on high streets, retail landlords seek to avoid paying business rates on empty units and are happy to offer £1 annual rental in return for payment of business rates.
Retailers taking advantage of the rental offers on end-of-lease outlets include Dixons and Card Factory, a lower-cost rival to Clinton Cards according to the Financial Times.
Apart from falling demand, unfair competition from charity–shops that have an 80% discount on business rates, and unrealistic parking charges, high street retailers have been unable to compete because of being tied into long (25 year) leases with no break-clauses and upward-only rent reviews. This legislation has to some extent fallen into disuse in recent years in response to market realities, but the law still needs to be changed in order to totally eliminate the practice.   
Finally, according to the Financial Times, high street retailers are also disadvantaged by the fact that business rates are based on a shop’s estimated annual rental value, on a five-year cycle, pegged to inflation More  
This will inevitably lead to further trade concentration in out-of-town developments, at the expense of the high street.
Suppliers face the dilemma of wanting to stimulate and support alternative routes to consumer, but current high street realities force them to invest in major players giving more reliable returns on trade funding investment... 
If the government are serious about attempting to restore the health of the retail high street they need to conduct realistic diagnoses and tackle root causes on a fair-share basis, in line with market realities…

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