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BPF: ‘Don’t rush to blame landlords for retail woes’

However, property owners and investors, led by the British Property Federation (BPF) have sought to defuse the row by offering major concessions including changing leases to allow for monthly rent payments and reducing service charges, which pay for shared energy and facilities, like lifts.

It is not known whether Green or Harris rent property they own on monthly terms.

John Richards, chief executive of Hammerson, which owns Leicester’s Highcross shopping centre and part of the Bullring in Birmingham, said: "Landlords are generally open-minded in discussions with their tenants on matters of affordability and short-term financial pressures. We’re working extremely hard to understand the problems our tenants face on a unit-by-unit basis. We see no merit in having an adversarial relationship with them."

BPF chief executive Liz Peace admits that the recession has damaged the image of the property industry, and stresses that maintaining close relationships with tenants will be important for landlords’ efforts to turn this around.

She said: "We need to remember that many large landlords are actually the pension funds and financial institutions that manage the savings of the man in the street. Their investors are not faceless moneymen but members of the public who have their pensions and savings tied up in shops or offices. Demanding massive concessions will not only hurt future development but hit the financial well-being of savers – the general public – who are already suffering from tiny interest rates on deposits.

"There is no easy answer when we’re suffering the worst downturn for nearly a century and clearly there is scope for negotiation and for easing the burden. This is exactly what the leading landlords have been doing. But landlords are suffering just as much as retailers. Clearly the terms of leases – including quarterly payments – were agreed freely by both sides and you simply can’t rip up thousands of contracts on the fly. But ultimately, common sense tells you that no landlord will want a bankrupt tenant and an empty building. They need rent like retailers need sales."

Paul Moorcroft, partner in the real estate team at international law firm Eversheds, said: "We do get a sense of greater collaboration in the retail property market – a sense of ‘we are all in it together’. There is plenty of evidence that landlords are seeking to work with retailers who are in genuine financial difficulty. Landlords have their own cash flow and banking covenants to consider but further unoccupied property in the high street serves no one’s best interests."

Eversheds associate Gareth Ashfield said: "It will be interesting to examine if the switch to monthly rents lasts beyond the economic downturn. It may be that landlords will amend the structure of their investment to counter retailers’ concerns that quarterly rents are outdated."

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0 thoughts on “BPF: ‘Don’t rush to blame landlords for retail woes’

  1. Dave Jobson says:

    Q/ What caused the last housing bubble & subsequent credit crunch ?
    A/ 100% mortgages.
    Property is now less easy to buy because 100% mortgages have gone.
    So buyers now need to save a deposit. So things have returned to how they used to be with a more stable market. Good I say.
    However rather than save, these days couples seem to want to rack up £30k student loans invariably studying subjects that are useless to employers. Spend £10k on weddings. Run two cars. Take foreign holidays, live on over priced take away food & pizzas. Own the latest mobile phones & shop in Waitrose instead of lidls.
    Then they complain they can buy a place so they blame BTL landlords !
    Why don’t they simply save a deposit as my wife & I did 32 years ago.
    We ran one old car & took cheap holidays in the UK.
    We saved for 18 months to buy our 1st house & moved in & furnished it with ‘hand me downs’ & 2nd hand furniture & a 12 year old TV.
    The rental sector is vital for people in the stage of their life where they aren’t ready to settle down because of their career or studies. It only comprises 11% of the mortgage market. Blaming BTL landlords for unaffordable housing is like blaming car hire companies for unaffordable cars. Many amateur BTL landlords & speculators actually bought incautiously at high prices & have had to sell low. They’ve taken the hit on prices that will benefit those that buy such properties.
    Prices are kept higher than they would otherwise be due to excessive demand due to over population from immigration & lack of house building.
    There’s always been a rental sector that is needed. There’s always been money available to buy property to let. There was before BTL mortgages were invented in 1996. It was called the semi commercial mortgage.
    Please stop blaming BTL landlords for housing being less affordable. It’s no less affordable now than 30 years ago when a deposit was needed then before you could get a mortgage.