Novelist. Author of APSARAS and tales from the beautiful Saigh Valley. First person to quantify spiritual values.

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Thursday 9 September 2010

Shop closures

Reports indicate that between one in five and one in seven shops in the UK are boarded up. The problem is worse in the north of the country.

The recession has, of course, played a part but I believe there is an underlying, more fundamental reason why this should be so. Landlords are charging too much rent and the reason for this is what lies at the very heart of what is wrong with the politico/economic system we live in. Simply put, accountants tell the landlords that they need to make a certain return on their capital outlay, in this case the cost of the land and the property, regardless of what is a realistic value. Sadly, in this materialistic world of accountancy and greedy bankers, realism is subservient to the grab and grab philosophy more suited to the survival of the fittest scenario to be found in the jungle. Landlords are reluctant to drop rents because that reduces the book value of their property and hence, the value and credibility of their businesses.

One industry that has suffered particularly is the tenanted public house trade. Breweries, increasingly managed by accountants rather than brewers, saw their pubs dramatically rise in value since the seventies and put up their rents accordingly. In a trade reeling from the drink driving legislation ( correct, but harmful to the business) and the rise in cheap out-of-town supermarket booze, unrealistic rent increases were another nail in the coffin.

Would it not be better if the landlords and their tenants formed a sort of partnership, where the former take a proportion of the profits only? I would also include mortgage lenders in this scheme as well.(Possibly there could be a industry standard lower level to avoid problems due to lazy or imcompetent traders.) This would give all parties the incentive to make the business prosper and grow.

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