snowychap Posted January 10, 2013 Share Posted January 10, 2013 But the government should have intervened somehow to make Jessops good! Who suggested that? Link to comment Share on other sites More sharing options...
peterms Posted January 10, 2013 Share Posted January 10, 2013 So using Jessops as an example, what would you suggest the government do? Of the points I mentioned above, three are relevant to government, and one is about changing market conditions. The situation we have at present, where investment companies and other landlords own most shop premises, is very unhelpful. If you speak to people running small businesses in high street premises, whether retail, or catering, they will often say that they have difficulty finding premises which are affordable and on a reasonable lease. Sometimes if the business looks like it's becoming profitable, the landlord will use the rent review to jack up the rent, banking on it being too difficult for the business to up sticks and move. Classic rentier behaviour - but the value created by the business is being sucked out of it by an essentially parasitic landlord. I'd like to see local authorities encouraging sustainable local businesses by using compulsory purchase to buy up a lot of premises, and turn them over to an agency perhaps run on the lines of a secondary housing co-op, with expertise in managing and maintaining premises, letting them on a rent that covered management and maintenance costs, but which was non-profit. The agency could be run by staff reporting to a board comprised of the businesses involved, probably with some involvement from the council as well. The businesses allowed to rent would be agreed by the agency, subject to some criteria (things like avoiding endless duplication, trying to get some sort of balance, the kind of criteria which farmers' markets currently use in deciding to let in new traders). At the moment, councils quite happily engage in compulsory purchase, site assembly, creating infrastructure and facilitating planning permission for vast superstores for Tesco and the like. Why not do a little to help small businesses, maintain some diversity, and stop our town centres turning into wastelands of pound shops, nail bars and charity shops? Unfair competition is a big issue. One of the problems with eg Amazon is that it is not paying for the infrastructure it requires in order to operate - roads, legal system, all the rest. Its competitors are actually paying for those things through their tax, and they're also paying Amazon's share. By failing to address this, the government is allowing some pretty unfair trading conditions to develop. Third, lending to businesses isn't working. In Germany, the government has encouraged banks which operate on a more local and regional basis, and which see long-term investment in business as a core competence. We seem content to let banks act in a massively socially destructive way instead. That's one factor in Germany's economy being stronger than ours. The government should do something about it. I don't know if those things would have saved Jessops. I agree with many of your criticisms of them. I don't think they coped well with the transition from film to digital and then from cameras to smartphones, they never appealed much to specialist photographers, and they probably should have been a lot more proactive in anticipating what else they could have done. But the problems facing a whole raft of businesses are broader than Jessops' failings, and it seems to me there are things which government could and should be acting on. Link to comment Share on other sites More sharing options...
peterms Posted January 10, 2013 Share Posted January 10, 2013 If high streets morph into a different kind of social area full of cafes and niche boutique shops... That's not what's happening, though. They are becoming dilapidated, unattractive. It's something of a downward spiral. We can either choose to do something about it, or take a more fatalistic approach and say we are helpless in the face of the market. Businesses exist to service, or in the cleverest cases to stimulate, consumer demand. If they misjudge that or fail to do it in a way that a customer feels adds sufficient value to their shopping experience (see Risso's last two posts) they are screwed. No business has a divine right to exist and it is not the role of the state to prop them up - and that goes for the banks too. The state isn't there to save every individual business (though going back to Ted Heath, I suppose he would say the decision to save Rolls Royce looks like a good one now, regardless of the frothing ideologues in his own party who said otherwise). However, if the environment is changing in a way which a large number of businesses find difficult to the point where they fold, then it seems to me the state does have a responsibility to ask whether that's just fine and dandy, or whether some intervention is appropriate. Link to comment Share on other sites More sharing options...
tonyh29 Posted January 10, 2013 Share Posted January 10, 2013 Of the points I mentioned above, three are relevant to government, and one is about changing market conditions. The situation we have at present, where investment companies and other landlords own most shop premises, is very unhelpful. Even for our industry where we hire venues up and down the country , the venues weren't getting many bookings so their solution ..... Hike their prices up by 20% for regular users like ourselves instead of maybe lowering their prices and trying to attract more work A venue we use in Croydon came directly to us and asked if we wanted a long term deal with them for a favourable price , which we did .. result being , they have regular income for the next 12 months and the venues that tried to stiff me for 20% now have zero business from me when they used to get quite a bit ... Link to comment Share on other sites More sharing options...
peterms Posted January 10, 2013 Share Posted January 10, 2013 Even for our industry where we hire venues up and down the country , the venues weren't getting many bookings so their solution ..... Hike their prices up by 20% for regular users like ourselves instead of maybe lowering their prices and trying to attract more work A venue we use in Croydon came directly to us and asked if we wanted a long term deal with them for a favourable price , which we did .. result being , they have regular income for the next 12 months and the venues that tried to stiff me for 20% now have zero business from me when they used to get quite a bit ... If you hire venues for occasional events,you have good capacity to switch. In the case of say a small restaurant which has done the place up, equipped the kitchen, built up regular customers, it would be a big deal to move elsewhere. They have much less bargaining power. Link to comment Share on other sites More sharing options...
villamark Posted January 10, 2013 Share Posted January 10, 2013 Well a landlord can only put the rent up if there is the evidence to support the increase in rent, for example a new letting on a nearby property. They have to ignore the sucess of the business and any goodwill. Landlords have to have the ability to increase rents as the market improves. I would sugggest that they should get rid of upward only rent reviews, so if the values drop the rent can be reduced at rent review. A major problem is the cost of business rates, the government has done everything to keep them as high as possible. Link to comment Share on other sites More sharing options...
Risso Posted January 10, 2013 Share Posted January 10, 2013 Peter, commercial property has never been cheaper to rent due to the high amount of empty units in UK towns, and extremely generous terms and rent free periods are now very common. You can't on the one hand blame the government for policies hat have led to the death of the high street, then on the other complain about high rents and bad landlords. There's never been a better time to take out commercial leases as long as your business model is viable in the first place. Link to comment Share on other sites More sharing options...
villamark Posted January 10, 2013 Share Posted January 10, 2013 Risso, lots of companies are tied into leases that are upward only, so they can not be reduced at rent review. If a company takes a new lease now they can get a great dea, landlords have to pay the business rates on empty properties now, so they are desperate to get rid of the liability. In theory this brings the level of rent down. The downside is that it has cut the amount of construction as developers do not want to be stuck with empty units esp industrial. Link to comment Share on other sites More sharing options...
Risso Posted January 10, 2013 Share Posted January 10, 2013 I've seen companies with upward only rent reviews but who have break clauses, playing hardball and basically asking for the lease to be completely revised. It happened to us last week in fact. In addition, where rent reviews go to independent arbitration, I haven't seen an increase in over a year. Link to comment Share on other sites More sharing options...
villamark Posted January 10, 2013 Share Posted January 10, 2013 But you have to have a break clause to play hard ball, if you signed a 15 year lease with 5 year upward only rent reviews you are stuck at the rent you agreed at the start of the lease before the economy went south. The only option would be to put the company through to get out of the lease, some landlords have given rent reductions but that is rare. There have been increases at rent review in London and more affluent areas, places like Wolverhampton have seen massive drops in rents. that is why the governments decsion to delay a business rates revaluation for 2 years is a joke. Link to comment Share on other sites More sharing options...
Risso Posted January 10, 2013 Share Posted January 10, 2013 Agreed Mark, but sometimes even upward only rent reviews can be reconsidered if there's a big chance of a company going bump. Depending on the area and demand for units, I reckon most landlords would accept a reduced rent if it was a choice between that and getting a fraction from a liquidated company. Maybe not if you're in a high demand area, but the average UK high street isn't really going to have excess demand as a factor, which was the original point I was making to Peter. But anyway, you seem to know what you're talking about, if you ever come across any interesting investment opportunities, let me know! Link to comment Share on other sites More sharing options...
peterms Posted January 10, 2013 Share Posted January 10, 2013 You can't on the one hand blame the government for policies hat have led to the death of the high street, then on the other complain about high rents and bad landlords. Why not? Don't you think both can co-exist? Yes, rents have come down in some cases (more for new lets than existing leases, as has been said), but not far enough or fast enough for many retailers. The British Retail Consortium has made the point many times that landlords aren't very flexible. Even on things like moving from quarterly payments to monthly, many retailers have found landlords unwilling to move. The FSB has also commented that rents remain "stubbornly high". I'd like to see some approaches which remove the rentier from the equation. Link to comment Share on other sites More sharing options...
Awol Posted January 10, 2013 Share Posted January 10, 2013 I'd like to see some approaches which remove the rentier from the equation. Apologies is the above was a "wah", but... So (and I'm not being facetious here) you think the government should be allowed to effectively seize private property through compulsory purchase schemes if someone (whoever that may be) decides the landlord is asking for too much rent??! Doesn't that rather defeat the concept of private property? Link to comment Share on other sites More sharing options...
Davkaus Posted January 10, 2013 Share Posted January 10, 2013 Anyone here had a 32% payrise recently?. Or 3.2% come to think about it. Shameful. Link to comment Share on other sites More sharing options...
Risso Posted January 10, 2013 Share Posted January 10, 2013 If they put the salaries up they might get some decent candidates wanting to be an MP. Link to comment Share on other sites More sharing options...
blandy Posted January 10, 2013 Moderator Share Posted January 10, 2013 I don't know if those things would have saved Jessops. I agree with many of your criticisms of them. I don't think they coped well with the transition from film to digital and then from cameras to smartphones, they never appealed much to specialist photographers, and they probably should have been a lot more proactive in anticipating what else they could have done. But the problems facing a whole raft of businesses are broader than Jessops' failings, and it seems to me there are things which government could and should be acting on. Yes. poor companies will struggle, and come hard times, they'll go under. The internet and Amazon and the like, isn't really something that the Gov't can control, it's pan national. But there are plenty of things governements should do to help businesses. They are, IMO, obligated to help - business employ the people of the country, the citizens, and it is governments role to do what can be done for the benefit of the people they represent. They should be (and are, I think, now) looking at working with other nations to adress the tax avoidance issues. They should be looking at business rates - by freezing council tax and telling councils how much they can spend, they force councils to raise business charges. Private landlords - from PubCos to high streets are taking advantage of small and medium businesses with the rent, as has been said. Often it's almost a monopoly. There are landlords controlling large swathes of a high street in a town - so they have the shopkeepers by the 'nads. Jessops should have changed, should have tried to adapt, but didn't, and its not the Govt's fault they went under, but there are post offices, newsagents, pubs, butchers and bakers and all the rest being put out of biusiness by the likes of Tesco - planning should take into account the effect of the major supermarkets on little shops and the character of towns and streets. Gov't (local and national) could and should do much more about this. You can't stop progress, but you can steer it. Link to comment Share on other sites More sharing options...
peterms Posted January 10, 2013 Share Posted January 10, 2013 Apologies is the above was a "wah", but... So (and I'm not being facetious here) you think the government should be allowed to effectively seize private property through compulsory purchase schemes if someone (whoever that may be) decides the landlord is asking for too much rent??! Doesn't that rather defeat the concept of private property? What's a "wah"? Government, local and national, has had the power of compulsory purchase for a very long time, and has exercised it often. It has been used for creating new roads and railways where existing property stood in the way; as a measure for dealing with rogue landlords; as part of area regeneration. It means that there is a right of private property, but it's not an unlimited and sacrosanct right, and never has been. I believe it should be used in the way I've described, as part of a strategy of economic development and preventing town centres crumbling into dereliction. It's not nearly as radical as you think. In fact, I'm slightly embarrassed by how limited and moderate it is. I really should be doing better. Link to comment Share on other sites More sharing options...
villamark Posted January 11, 2013 Share Posted January 11, 2013 So on one hand you complain about unfair competition from online retailers, but you want to create an unfair market by some retailers having cheap rent from the government who has compulsory purchased from the landlords. Who is going to pay for all the properties that the government will buy at market value? but then renting out at well below market rent. Tenants are not forced to pay high rents they enter into a lease, they negotiate to get the best deal they can, one of the major mistakes that small retailers makes is that they do not take professional advice when taking on a lease. As the biggest retail landlords tend to be pension funds, would you not be taking billions out of people’s pension pots? Link to comment Share on other sites More sharing options...
Eames Posted January 11, 2013 Share Posted January 11, 2013 If they put the salaries up they might get some decent candidates wanting to be an MP. To be fair, if you anonymously surveyed any workforce in any industry in the UK, they will all tell you they are chronically underpaid and deserve a massive rise. In other news, dog bites man. Link to comment Share on other sites More sharing options...
CI Posted January 11, 2013 Share Posted January 11, 2013 Hearing Safeway may be about to go under Link to comment Share on other sites More sharing options...
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