One of the largest landlords in the UK has broken ranks with the property industry by agreeing to end the historic requirement to pay rent quarterly in advance for all its 2,000 tenants.
Hermes, the pension fund manager that oversees £11bn of property in the UK, is to offer to scrap existing lease terms and introduce more flexible conditions, including monthly, rather than quarterly, rents. The offer is open to tenants across its retail, office and warehouse properties.
There has been a dispute for more than two years between the country’s largest retailers and their landlords about lease terms, centred on the payment of rents in advance every quarter.
Retailers complain that quarterly payments are an unwelcome burden on their finances in difficult market conditions. The decision by Hermes comes days before the next quarterly payment day on September 29, when many retailers will be facing a struggle to find the cash to pay the next quarter’s rent.
Hermes has 1,800 shop units in its direct portfolio. The final quarter rent is particularly testing for retailers as it comes after the slow summer period and before the Christmas rush.
There has been particularly fierce lobbying led by Sir Philip Green, owner of Arcadia and BHS, and Lord Harris, chairman and chief executive of Carpetright. Sir Philip is to meet more landlords to discuss rental terms next week. He has the support of many fellow retailers.