It is time for landlords to take a more flexible and sensible approach to businesses that find themselves glued to irrevocable contracts, an insolvency practitioner was warned.
Gerald Irwin of Sutton Coldfield based licensed insolvency practitioners and business advisers, Irwin Insolvency said that landlords now face a dilemma, pragmatism or the risk of vacant properties as businesses fail.
Market conditions have changed radically over the past few years which has meant that many businesses, in particular, small professional practices, need to downsize and move to cheaper accommodation.
For example, the legal sector is vulnerable with de-regulation which will soon allow others to start providing those services which were once the domain of the small High Street solicitor.
“Make no mistake, de-regulation will affect all sectors and this is why so many mergers and acquisitions are currently taking place cautioned Mr. Irwin. Look at most High Streets and the amount of vacant space tells the whole story.
“Landlords who fail to negotiate new deals could well find themselves with having to pay business rates on empty properties caught out by the Government’s void rates regulation,” he added.
If landlords who force neighbourhood businesses out through rent increases fail to get higher rents for their commercial spaces in their buildings, they will be less likely able to cover their own mortgage payments. The resulting deficits could lead to them defaulting on their mortgages and having their properties foreclosed on by their lenders. It is all a bit self-defeating really.