Entering the UK retail market

Property is generally made available to retailers in the UK on a leasehold basis.

Demand for space in the top retail shopping centres and out-of-town retail parks is high, although the economic climate in the UK in the last two years has caused tenant insolvencies which have left plenty of available properties in less-favoured high street locations. The slowdown in property development, and the lack of new properties being introduced to the market since the change in economic conditions, have led many to speculate that this will heighten demand and will operate to increase rents charged in the primary retail locations.

Typical terms

The opportunity to acquire property might come in the form of a new letting offered by a landlord, or from an existing tenant seeking to relocate (and therefore seeking to transfer its existing lease).

In either case, if the prospective tenant is a start-up company or is based outside the UK, landlords are likely to require additional financial security for payment of the rent. This will probably take the form of a deposit equal to six or 12 months’ rent. This deposit reflects the increased difficulty of enforcing payment and other lease obligations should the landlord need to seek to enforce legal action outside the UK.

Paul Moorcroft is a partner at Eversheds