Rising rents now putting pressure on companies

23 June 2015

It has been revealed the well-known London restaurant, The Criterion, has entered administration, 140 years since it opened.

The reason behind this decision was the landlord’s demand of a 60% rise in rent, from £525,000 to £850,000 a year. The company had been unable to meet this and so sought advice from Kubik. 

The company stated, “It was decided that Administration was the most viable option as it allows the business to continue to trade as normal whilst the administrators market the business for sale.”

The Bewl Water Sailing Club, published earlier today, also had to close due to expensive rent.  At KSA Group, we have received a few calls about increasing rent/rates costs causing financial problems. Changes last year to the seizure of goods process made the whole procedure more transparent, giving extra time for struggling business to pay back debt. 

Once a Notice of Enforcement is issued, the debtor has seven days to pay back monies owed before bailiffs can take control of goods. 

In the case of rent arrears, the commercial rent arrears recovery procedure (CRAR) kicks into action if rent payments are missed and the landlord wishes to take action. 

Of course, it's rare that a rent increase is the root cause for a company's problems. Rent rises, especially with regard to high street locations, should reflect the value of the area where they are situated, which is a function of the likely income. However, the restaurant business is particularly fickle and just being in a good location is not enough by a long way. We do not know the full details of the lease so it is hard to be sure what happened.