Member Article

Retail property regulations hampering new store openings

The PopUp Britain campaign is calling for changes to the law to disincentivise landlords and administrators from keeping shops empty until a long-term lessee is found.

Following the recent demise of high street names, the group says shops could remain empty for years unless the law is changed.

Administrators dealing with beleaguered retailers are tied by regulations surrounding the leases they inherit, which can rule out opening shops on a short-term basis.

Simon Morris, director at retail property consultant GCW said: “Administrators are broadly in a Catch 22 scenario. Once rents are due following the administration on those properties they are either not continuing to trade, are sold as a going concern, to a new retailer – or they become a potential liability.

“The administrator would ideally like to offload these back to landlord as swiftly as possible as they have no use for them, however administrators cannot disclaim leases, they can only be surrendered by mutual consent or the landlord can commence forfeiture proceedings.

“A way of tackling this problem would be by making it easier for the administrator to hand a property back to a landlord. Once it is in the landlord’s possession they will be concerned about rates mitigation and key way of doing this is by achieving temporary occupation of the property whilst trying to find a permanent tenant.”

Nick Darby, managing associate at law firm SNR Denton said: “The difficulty is empty rates liability. Landlords will be reluctant to allow a change in the law as this will mean an earlier rates liability than would otherwise be the case, unless there is an immediate guarantee of a new occupier.

“What happens in practice is that the landlord will know the property is coming back at some stage - perhaps one year - and start marketing. If they do find a new occupier, the administrator is likely to agree a surrender of the lease. In the meantime the property remains empty. It is that gap we are trying to cover.”

This was posted in Bdaily's Members' News section by Tom Keighley .