Tomorrow, (Saturday 29th) is the next deadline for quarterly rent payments, where 3 months’ rent is paid in advance for commercial properties. Recent research by R3 shows that 18% of businesses in the retail sector are struggling to pay their debts as they fall due, indicating that this quarter’s rent day could be the final straw for many.
JJB sport recently filed a notice of intention to appoint an administrator and is not the first retailer to have struggled in advance of the rent day. Game Group also filed a notice of intention to appoint before March’s quarter day.
Nick Keitley, Chairman of R3’s Southern Committee and Partner at Bond Pearce in Southampton, comments:
“The retail sector is under enormous strain and the quarterly rent payment will represent a significant outgoing for businesses. Many leases will have been set up a long time ago, and in today’s economic climate, are not sustainable. Businesses in Southampton are looking into ways to manage their cash flow more effectively, and are attempting to pay rent on a monthly basis or even negotiating turnover linked rents.
“It is vital that viable businesses are given all the support they need to survive this challenging environment. This means that landlords need to been more flexible with their leases, but also that businesses that are concerned about their cash flow seek advice early.
“We are also calling for greater clarity surrounding the issue of rent due in the event of an insolvency, whether it counts as an expense of the administration and over what period. This issue has been driven by case law and uncertainty is driving approximately 1,200 businesses a year into liquidation. If the notice to appoint ends before the quarter day, the administrator can be liable for the full quarter’s rent, even if not occupying the site for the full period. We need the rules to be clarified in order to support business rescue in the South East.”
