Why Quarterly in Advance Rent
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If you are the landlord this question is very easily answered as you wish to have your money in advance for cashflow reasons. If there are any problems with the retailers you will have some time to sort it out. For the retailers/tenants it can be very difficult to be paying quarterly in advance, particularly if the quarter is due during a lean trading period.
Monthly in arrears, monthly in advance?
Many retailers are pushing to pay monthly as this is far easier for them to digest and manage with their cashflow. We spoke to one specialist in this area and we asked would they prefer monthly in advance or monthly in arrears and he commented that they would just prefer monthly!
These are meant to be popular in America and some other countries and they are fairer. They can of course be difficult for the landlords to police with them not being able to establish what income the retail incomes are really making and of course equally the retail tenants would not be that forthcoming with true profit as this will cost them additional rent, although we have heard that many landlords can very accurately gauge the typical profit based upon the footfall and indeed the type of footfall the passes these businesses.
With a property that is leased the rent that is payable is very much dictated by the strength of the property market. Where the market is strong the landlords have the upper hand, there is a supply and demand issue, the landlords having the supply of the property where of course the tenant needs to run his business from. Where there is a downturn in the market, or recession, the tenant may well have the upper hand when negotiating for rent and the terms that were fixed by the landlord in better times are now subject to negotiation.
Negotiate, negotiate, negotiate
We feel that the fairest way for both parties is to negotiate, negotiate, negotiate until they have a settlement that they are both in agreement with. We would, however, say to the business owner / tenant / leaseholder that there are limitations placed on the landlord, particularly where they are institutional as to what their investors require as a sound long term investment. Equally, the landlord needs to understand that the business owner is running a business and it ahs to be a viable proposition, both in the short and the long term.
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If you have a commercial property, be it leasehold or freehold, then you may wish to look at our Dilaps Website at www.DilapsHelp.com and for Disputes go to our Disputes Help site www.DisputesHelp.com .
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