Diane Bardon is owner of womenswear independent De Joli in Chiswick, west London.
For many years independents and SMEs have been angry and frustrated that they can’t do anything to stop rent hikes. As a result of this, many businesses have failed and been forced to close down. I am afraid this pattern will continue if the government does not do anything about it.
I do not understand why there hasn’t been any legalisation put forward to help independents and SMEs acquire a freehold if their business leases the premises they trade from and has done for several years.
In the past few years, reforms and legislation have been passed to help residential tenants. If you rent a council flat then you have ‘the right to buy’ it after a certain amount of years. If you own a residential leasehold property then you have the right to buy the freehold or a share in it. If you are a first-time buyer you get help to buy your property. However, we have not seen any legalisation to help independents or SMEs buy the freehold of their business leases.
The only thing commercial tenants get offered is first refusal if the landlord wishes to sell. In some cases the freehold changes hands without the tenant’s knowledge. This needs to change.
Another burden on small businesses is the fact that most commercial leases require tenants to improve properties under the ‘full repairing lease’. This adds a huge burden on top of rising rents and rates.
Under the full repairing lease tenants are required to keep premises in good condition – even if they are not in good condition when they first lease them. If business owners fail to meet these responsibilities, the landlord may be entitled to have work done and claim the costs from them. The landlord may also be able to start eviction proceedings. If at the end of the lease you fail to leave the premises in good condition, the landlord may claim damages, including the cost of repairs, loss of rent and any other damages.
If legalisation to give independents and SMEs the right to buy the freehold of their business can be put in place, this would give them an incentive to continue trading and improve the property they own.