Rent Quarter Day Could Force More Retailers into Administration

Posted on 29 June, 2012 by Neil Bird

The organisation representing the UK insolvency industry has warned that more retailers could soon be facing administration. The gloomy forecast comes as advance rents become due on commercial properties – a date known as rent quarter day.

Speaking on behalf of trade body R3, Lee Manning said; “Rent quarter day is typically the time when struggling retailers go into administration. Retailers are committed to meeting three months of obligations on their stores, while they often have pressure on cashflow at the end of the month from the payroll and maybe a VAT bill too.”

He went on to caution that creditors would rather see retailers enter administration when there is stock in the commercial property that can be sold to meet financial obligations. This explains the high level of insolvencies over the Christmas period.

Likewise, the end of June is another risky period for retailers who may have unsold summer stock that can quickly be converted into cash. “There are at least a couple of retailers contemplating administration that you hear about,” Mr Manning added.

The warning follows research conducted by R3 showing that 26 per cent of retailers have been identified as at risk of failing over in the next 12 months. Insolvency expert Mike Jervis cites commercial property expansion as one of the factors adding to the difficulties faced by the retail sector.

He said; “Many retailers are still not being strategic in terms of how much space they’ll need and we often see over expansion lead to distress. For those that have already taken too many units they need to be realistic and plan ahead to liaise with their landlords as early as possible.”

As rent quarter day threatens the future of more retailers, research from commercial property agent Colliers International shows that shop rents have remained static or have fallen in 350 out of 418 town centres in the year up to the beginning of June.

However this should be considered against the background of research from Investment Property Databank (IPD) which reveals that retail rental values have only fallen by 1.1 per cent over the past 5 years despite the recession.

The figures also show that rents in Greater London have actually risen by an average of 6.7 per cent while rental values in Central London have soared by 9 per cent over the same period.

If rent quarter day causes the failure of any more retailers they will join high street names like Clinton Cards, Game and Peacocks who have all gone into administration in recent months.




Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Recent Posts

Interest Rates Impact on Commercial Property

Commercial Property Investment Outlook for 2023

The best places to stay on the Riviera

The latest property data has identified Newquay as the fastest property seller’s market in the UK

Investing in your garden can increase your property’s value

French Riviera temping high-end homebuyers

How can the ownership rights of my commercial property impact a business sale?

Should I incorporate virtual property viewings permanently?

Investment expected to increase across Asia-Pacific in 2021

UK property industry slows as the conclusion of tax break looms

BNP Paribas cautioned investors on Friday as debt-trading bonanza that increased its earnings this past year

Over 300,000 property purchases fell through in 2020 – we show the most frequent motives and the best way to get your house sale back on track

House Prices in the Capital Surpass £500,000

Optimism from the Bank of England’s chief economist

The most expensive commercial properties.

Businesses operating from shared premises will miss out on grants