This was written to the NSA for Retail to lobby government to change the Landlord and Tenant Act to fill vacant shops on high streets
I have spent my career in the retail industry, twelve years of which as CEO in a publicly listed UK fashion company. I am now involved in three UK companies.
At the moment a new retail tenant, often a start-up, will be asked for a year’s rent in advance (kept as a deposit until the term ends), and then be expected to sign a long lease (legally binding contract) with upward only rent review clauses built-in. The tenant will also be asked to sign a personal guarantee, often secured on a residential property.
These terms turn off a huge percentage of would-be tenants and start-ups, and frighten many people.
My key suggestions, therefore, are these.
- Allow (by law) a new business (or formed within one year) to enter a property (providing the property has been vacant for one year) with no upfront payments.
- Allow the tenant to pay 10% of (audited) sales (net of VAT) as rent, weekly, for a one year term. No minimum guarantee required.
- After one year, if the business wishes to continue, then terms are agreed between landlord and tenant, or the tenant leaves. The tenant gives one month’s notice.
- If the tenant leaves (after one year) then the property must be vacated, at least, in the condition it was found in.
- The Local Authority agrees to accept 50% of normal rates payable for year one. (Remember Charity Shops pay no rates).
- After one year, if the business wishes to continue, then rates step up annually by 10% until they reach the full amount payable, or when the new lease ends whichever is the sooner.
- If you are an existing shop, and up to 50% of your street is vacant, then you have the legal right to re-negotiate your lease.
The Government needs to review, and re-write the Landlord and Tenant Act 1985 and work with Local Authorities to enact these measures.
If this was to occur, new business’s and artisans would flock to the High Streets, and very quickly your vision of places “where people shop, watch a film, grab a bite, post a letter, get advice or just meet up” would happen.
It should not be dismissed that every new business needs to find cash for stock and for shop fit out.
These radical measures would give oxygen to the hundreds of thousands of ideas that the naturally entrepreneurial British spirit contains.