Luke Johnson calls for 'wholesale' change in landlords and tenant relationship

11-Sep-2012 - Last updated on 12-Mar-2017 at 03:47 GMT

Related tags Renting

Luke Johnson, the serial sector investor, criticised landlords during his keynote speech at the BCSC conference, calling for wholesale changes to the relationship between landlords and tenants.

He called on landlords to work in a greater spirit of partnership, for an end to upwards-only rent reviews, a switch to monthly rents and transparent service charges, and urged them to be more adventurous in their tenant mix.

Johnson said: “When I started in restaurants and retail you were able to make twice what the landlord was making and that seems to have reversed. I’m not sure that’s right. Rents have risen to unsustainable levels.

“If you landlords and developers want this to be a country where your children have jobs, we're going to have to change. We can’t as a nation permanently earning our living by continuously selling investment properties to sovereign wealth funds.”

He also urged landlords to be braver in selecting new concepts: “Landlords, town planners, architects and agents need to think more about experiential and entertainment rather than simply transactional markets. There has to be a braver approach in looking for the mix of tenants than can exist in shopping centres, retail parks and high streets.

"I am not just talking about the usual mix of hospitality operators, but also bars, nightclubs, bingo, karaoke, ice skating ping pong, health clubs and play centres. Landlords have to be more adventurous and take more risks with new concepts, encouraging operators to bring more customers back to make shopping/going out a more essential activity.

“Part of the way which we can reach that future is by landlords working in a greater spirit of partnership, that means in many more cases percentage only rents with no minimums, lower and much more transparent and straightforward service charges and an end to what I think of as a fraudulent system, of comparables for rent review purposes, whereby you get a single tenant that comes in sets this whole new benchmark which leads to distorted uplifts, unsustainable rents and then you gets the spiral of tenants going bust, CVAs and the property associations saying that CVAs are unfair and so on and so forth.”