Wednesday, 1 July 2009

Hung, drawn and quartered

The last week has been very interesting. Being a currently retired person with far too much time on his hands I have been wandering about looking at things. In particular I have been looking at premises occupied by businesses that have appeared to be struggling over the last year or more. I expected to find that some of them have closed in the last week, indeed I expected to find that more closed in the last week than in any other week over the last six months. It's all a matter of a nice little legal quirk.

A lot of business premises are rented rather than owned by the businesses operating from them. Business rents are usually calculated as an annual amount but are not payable in one lump sum, they might be payable weekly, monthly, quarterly or half-yearly. Quarterly rents are probably the most common and the convention is that they are payable on the old Quarter Days - March the 25th, June the 24th, September the 29th and Christmas Day. It's easy to remember the Quarter Days because March has 5 letters, June has 4 and September has 9, therefore it's the 25th, 24th and 29th and everyone can remember Christmas Day (this was the most useful thing I ever learned from my old land law professor). Usually the tenant will be entitled to surrender the lease provided he gives a certain period of notice and the date on which surrender is effective is a Quarter Day. It is sensible for the end of a lease to coincide with the end of a rental period.

This means that June the 24th is a very significant date for ailing businesses. By Easter they will have a pretty good idea whether the current year is likely to allow them to sink or swim. Their banks will know this too. Close on the 24th of June and you have another six months of the year to try something else. Stay open and you are liable for another three months' rent as well as the extra staffing costs associated with summer holidays. Of course some businesses can expect to be at their busiest in the summer and for them a surrender at the end of September or December is more practical, but it presumes their bank will let them trade that long.

My perambulations established what I expected. At least eleven shops and three restaurants within twenty minutes' walking distance of FatBigot Towers drew down their shutters for good. Others are struggling on but with no visible signs of sufficient custom to make it worthwhile. I expect to see more of the same in three months.

1 comment:

Mark Wadsworth said...

As ever, Land Value Tax would help. Scrap Business Rates, payable by the tenant, (of course) and slap the landlords/owners with an LVT bill instead, whether premises are vacant or not, as we know from real life, this will force landlords to find tenants, which they'd be able to do if they dropped the rent (or increased rents by less than the Business Rates cut).

Cutting VAT and PAYE would help a lot as well, it's a two-pronged attack.