Landlords face growing risk of tenant insolvency

COMMERCIAL landlords should brace themselves for more signs of tenant insolvency given the spate of High Street retail closures, a leading law firm from Yeovil has warned.

Battens Solicitors has gathered a year’s worth of data on the loss of national retailers in its operating region.

Edward Thompson, pictured, solicitor in Battens’ property dispute resolution team, has identified at least 26 closures of outlets run by well known brands that have gone into administration or become insolvent since January 2012.

The list of retailers includes branches of Blockbuster, Comet, Jessops, HMV, Clinton Cards, Birthdays, Game Group, Peacocks and JJB Sports. Locations affected within the region are Yeovil, Chard, Taunton, Street, Weymouth, Dorchester, Bridport and Shaftesbury.

Mr Thompson said: “Most of the outlets are likely to be commercial leasehold properties. So there is typically a landlord in the background who stands to lose out when these brand names encounter difficulties or worse disappear.

''Of course, many commercial units and premises are leased to less well known occupiers whose plight doesn’t always get the attention given to these national chains. Insolvency is a common outcome in a struggling economy no matter the size of the business.”
 
According to the Insolvency Service, just under 5,000 companies in England and Wales experienced an insolvency event in the fourth quarter of 2012.
 
Mr Thompson said commercial landlords should be especially watchful for the next ‘quarter day’ of March 25, 2013, when commercial rents traditionally become due.

Most leases, he said, require tenants to pay quarterly in advance and there may be a further deluge of businesses being wound up at the end of March and April as we have seen post Christmas and in the New Year.

Battens is a Legal 500 firm with offices in Yeovil, Sherborne, Dorchester and Weymouth. For more information, visit www.battens.co.uk, call 01935 846000 or follow @BattensSol on Twitter.

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