Tapas eaten by landlord

Just round the corner from Eildon Street, on Inverleith Place, there was a little general grocers. My late great-aunt lived on Eildon Street; she couldn’t walk as far as the big Tescos (and didn’t like it much anyway) or the shops at Goldenacre, and she hated letting other people do her shopping for her. The couple who ran the shop got to like her and she them and they’d order items specially for her if she needed them.

Then suddenly a refrigerator with beer and wine appeared. As the couple were devout Muslims, this surprised my great-aunt. They told her that they didn’t have a choice – the landlord had told them their profits weren’t high enough, they had to start selling alcohol.

The shop was burgled. The beer and wine were all stolen. The shop was insured against theft, of course, but the insurance premiums went up. The couple protested again about having to restock the cabinet, but the landlord insisted. Because the exterior of the building was listed, they couldn’t put a metal shutter up. The shop was burgled again. The landlord instructed them to restock. The insurance premiums were too high. The shop folded.

While it may get into the news when Edinburgh Council, acting as a private landlord, raises the rent on commercial properties and drives out business, they are far from the only landlords that do that. Tapa on Hanover Street has closed down now, and they identify a legal wrangle with their landlord as the problem.

I know of no details in the Tapa Hanover case, but the pattern I have heard about businesses in Edinburgh is that all too often, the landlord of a commercial property will offer it at initially quite a reasonable rate: a new business moves in.

If the business is doing well, profits are up – the landlord may even make explicit instructions about putting the profits up, the landlord renews the lease at a higher rate of rent to claw back back more of the profits. The business owner puts prices up, if they can – tries to win more custom, if they can – but even if they can, the more profits come in, the higher the landlord raises the rent. Eventually the business collapses. The landlord once more has an empty property to rent – beginning at a low rate to draw in the next sucker.

In this system, no one wins except the landlord.

There is solid legal protection for residential tenants against a landlord unreasonably raising the rent. You can even take your landlord to the council to have the value of the property reassessed, which can result in a considerable drop in rent.

But where is the protection for small businesses against predatory landlords?

2 Comments

Filed under Restaurants

2 responses to “Tapas eaten by landlord

  1. Perhaps some flexibility is needed, say where a landlord can charge a fixed % of the turnover as rent. That would benefit the business, knowing that during downturns or slow trade, the rent would fall; during profitable periods conversely the rent would rise but proportionately so the business would easily absorb the increased rent.

    I’d like to know if, say, Edinburgh Council could trial such a scheme?

    Regards.

    (Fab blog btw!)

    • Thank you very much!

      It would seem only fair for small businesses to have some right of protection against landlords, similar to residential tenants.

      I expect that any such protection would need to be carefully thought through and then even more carefully legislated, or it could do more harm than good.

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