Bakery retailers are showing their support for criticism of upward-only rent reviews, with calls for the practice to be abolished in the UK.
The Irish government banned upward-only rent reviews in all new retail leases last month, while the British Retail Consortium (BRC) in the UK is currently gathering evidence from its members on the issue, which will be presented to the government after the election.
Ken McMeikan, chief executive of Greggs, recently argued that the UK should follow the Irish by abolishing the practice. "Given the increasing proportion of empty retail space on the high street, upward-only rent reviews impose an inappropriate pressure on retailers. In rent reviews over the next 12-18 months, we expect to see many rents frozen when they would have fallen in an open market," he said.
The financial director of one of the country’s leading retail bakery chains told British Baker that upward only rent reviews were anti-competitive. "Upward-only reviews penalise established well-run businesses. Landlords want to protect themselves during recessionary times, but they are driving people out of business."
A spokesperson for the BRC said it is looking into the practice because of complaints from its members. "Some of our members have reported that upward-only rent reviews are a problem, but others are concerned what effect removing them will have in terms of future developments and security of tenure," he said.
However, Chris Peck, executive chairman of Cooplands of Doncaster, said unhappy retailers only have themselves to blame. "Some retailers jumped headlong into leases simply to get prime sites, before other interested parties, and did some very bad deals. Nobody had a gun to their heads to enter into leases. They should honour them and stop moaning."