Sushila Pindoria, senior associate at Bircham Dyson Bell LLP believes that the letter being coordinated by the Property Managers Association, which represents large high street retailers including Schuh, Comet, Boots Opticians and New Look to request monthly rental payments from their landlords, is likely to fail.
"Landlords in these tough economic times are sympathetic to tenants who are incurring 'genuine' cash flow problems but I'm not sure that these major retailers can really claim that they face genuine cash flow problems; are they just using their bargaining strength in the market to obtain a better commercial deal?" explains Sushila.
"The danger is that if landlords receive too many of these types of applications from their tenants whether they are anchor tenants or the small private retailer; they are likely to raise the question as to whether they can afford to do this for all their tenants or just those facing a real financial hardship. The effect will be that requests made by the smaller tenants who are having real cash flow problems will not be treated as seriously as they ought to.
"There is always an exception to the rule as we have seen with the recent Game Group administration and one can only sympathise with the estimated loss of 6,000 jobs, but one has to look more closely at the figures here. The percentage of the outstanding rental payments (i.e. £21m) against the actual the Game Groups £120m debts is 11%. The damage has already been done to other parts of the Group's business and by agreeing to monthly rents would its landlords be providing a short term cushion?
"Surely in circumstances like this businesses should be focusing on long term recovery to identify if there is any 'life' in the business. It will be interesting to see how successful the large retailers will be in imposing the monthly rental payments upon their landlords."
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