Rent quarter day test for struggling Eastleigh businesses


 

Eastleigh businesses have until this Sunday to hit the next deadline for quarterly rent payments, where three months’ rent is paid in advance for commercial properties.

This hefty bill comes as British high streets have already cut over 21,000 jobs since the start of last year, due to difficult economic conditions and the rise of internet sales. Research by insolvency trade body R3, has found that in the retail sector, 26% of these businesses are currently in the ‘caution’ or ‘high risk’ band, in terms of likelihood of company failure in the next twelve months

James Stares, Vice-Chairman of R3’s Southern Committee and Director at Grant Thornton in Southampton, comments:

“Quarter day will always present a challenge to struggling Eastleigh retailers, some of their leases were agreed during the good times and will have many years to run. Negotiating with landlords is key to staving off insolvency although of course Directors must take care to avoid wrongful trading. Perhaps more businesses could pay rent on a monthly or ‘pay as you go’ basis so retail businesses are able to plan their cash flow more effectively. This is more likely to apply to newer leases however.

“The internet is cannibalising ‘bricks and mortar’ retail. Retailers need to adapt their business to stay in the game as we have seen a 12% drop in footfall on the high street in the year to April”.

So far this year several High Street chains with branches in Eastleigh were pushed into administration; Priceless, Clintons, Peacocks and Game.

Mr Stares claims the issue of rent often hampers the chance of rescue:

“We are also calling for greater clarity surrounding the issue of rent due in the event of an insolvency and whether it counts as an expense of administration.  Advance payment for rent is required despite actual usage – an administrator might only be using part of the premises for a short period of time, but be liable for a full quarter’s rent.

“The net effect means it is harder to trade a business during an administration. Businesses that are failing could be saved if the Government codifies what constitutes an administration expense, therefore alleviating any uncertainty.

This current situation is clearly not ideal during the current difficult economic conditions as a traded business is arguably likely to recover more for creditors, and save more jobs.”

Meanwhile, despite a recent rise in  the number of jobseekers  nationally, the latest employment figures show Eastleigh is bucking the trend.

The number of people signing on in the Borough fell for the third consecutive month to 1,557  – a decrease of 0.1% over May last year.



 


  3 comments for “Rent quarter day test for struggling Eastleigh businesses

  1. Peter Stewart
    June 24, 2012 at 7:35 am

    The current economic problems have been caused by globalism destroying the jobs of the developed nations. This in turn has destroyed the confidence of the peoples. This in turn has led to a prolonged recession or inability to grow.

    While it’s all very nice I’m sure, to think the developed world has benefited at our expense, our leaders had no right to give our jobs away without asking us first, and I cannot help feeling that had they asked us, we would have said, “stuff you”! Charity begins at home. I say bring back the jobs and let the developing world develop at its own pace.

    If just two people sign on then Eastleigh’s jobless unemployment in Eastleigh by 0.13%, and turn these positive figures into negative ones. Clearly if two unemployed people in Eastleigh die, then the “figures” would improve again.

  2. Peter Stewart
    June 24, 2012 at 11:51 am

    Oops! That last paragraph escaped the edit! It should have read:

    If just two people sign on then Eastleigh’s unemployment increases by 0.13%, and turns these positive figures into negative ones. Clearly if two unemployed people in Eastleigh die, then the figures would “improve” again.

  3. July 1, 2012 at 12:38 pm

    The problem with high rents, not to mention business rates, the cost of insuring business premises in Town Centres etc, does make people think twice when considering starting a business.

    It certainly did me. I’m better off not going down that route, I thought to myself a few years ago. Its better to find a reasonable PAYE job and endure the frustration of being exploited by somebody else…

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